Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Clyde Valley Electrical Power Bill [Lords] (by Order),

Second Reading deferred till Monday next.

County of London Electric Supply Company Bill [Lords] (by Order),

London Electricity Supply (No. 1) Bill [Lords] (by Order),

London Electricity Supply (No. 2) Bill [Lords] (by Order),

Second Reading deferred till Thursday.

North Metropolitan Electric Power Supply Company Bill [Lords] (by Order),

Second Reading deferred till Friday.

Edinburgh Corporation (Tramways, etc.)

Order Confirmation Bill,

Rothesay Tramways (Amendment) Order Confirmation Bill,

Considered; to be read the Third time To-morrow.

Oral Answers to Questions — SCOTLAND.

HIGHLANDS AND ISLANDS (ECONOMIC CONDITIONS).

Mr. MACKENZIE LIVINGSTONE: 20.
asked the Secretary for Scotland whether he is now prepared to appoint a carefully chosen commission to make a thorough and scientific investigation into the economic conditions of the Highland people, with special reference to the Islands, to explore every possibility for
improvement, and to report to this House?

The SECRETARY for SCOTLAND (Mr. Adamson): By my instructions, the Departments under my control have undertaken an examination of the (question of the economic conditions of the Highlands and Islands, and of possible means of improvement within their respective spheres. I have now under consideration the views of those Departments. In addition, other Departments whose administration extends over Great Britain are concerned and, pending discussions with them which are in progress, I cannot say whether the appointment of a Committee of Inquiry will ultimately be found necessary.

Mr. MACPHERSON: Does the right hon. Gentleman propose to appoint a Commission composed of men of knowledge and skill outside his own Department?

Mr. ADAMSON: Discussion is in progress with other Departments concerned, but I cannot say whether the decision will be in favour of the appointment of a Commission.

Mr. T. JOHNSTON: Has the right hon. Gentleman already taken steps to secure the survey of agricultural land in Scotland, which he promised during the Debate on the Scottish Estimates?

Mr. LIVINGSTONE: Is the right hon. Gentleman not perfectly aware that the Highland people no longer have any confidence in Government Departments?

ROAD RELIEF WORK, LEWIS (WAGES).

Mr. LIVINGSTONE: 21.
asked the Secretary for Scotland whether he has received a communication, signed on behalf of the workers engaged on road relief work at South Loch Erisort, in the island of Lewis, complaining that workmen are unable to earn under the contract system more than 4d. or 5d. an hour for work which is a great physical strain upon the men employed, also drawing attention to the shortage and unsuitability of the implements provided and to the fact that the earnings of these men are only paid at the end of five or six weeks' work, and that, owing to this method of payment, these men are unable to secure credit for their daily or weekly purchases; and, in
view of these conditions of employment, is he prepared to sanction such increase and expedition of payments as will enable these men to maintain their dependants and themselves in decent circumstances?

Mr. ADAMSON: I have received recently the letter referred to. I am having inquiry made into the allegations which it contains, and will communicate the result to the hon. Member.

LAND SETTLEMENT.

Mr. DUNCAN MILLAR: 24.
asked the Secretary for Scotland whether, as a result of the inquiries instituted by the Board of Agriculture for Scotland in connection with land settlement and other operations of the Board, he will state the number of cases in which two or more farms or agricultural holdings are in the occupation of the same tenant, and the number of led farms sub-divided by the Board under the powers conferred upon it by Section 7 (16) (a) of the Small Landholders (Scotland) Act, 1911?

Mr. ADAMSON: The Board of Agriculture's inquiries do not enable me to give statistics on the first point mentioned in the question, because the object of those inquiries is the projection of schemes of land settlement, and not the compilation of statistics. On the second point, I am informed that since 1912 the Board have subdivided, either wholly or partially, 74 let farms into smallholdings under the various Land Settlement Acts.

Mr. MILLAR: Is the right hon. Gentleman aware that in answer to a previous question he stated that no inquiry was necessary in regard to the number of "led" farms, and that the Scottish Board of Agriculture had already the means of ascertaining the number that existed? Will he now, as he states that he cannot supply the figures, agree to an inquiry as to the number of "led" farms throughout Scotland?

Mr. ADAMSON: I have given the figures?

Mr. MILLAR: Is the right hon. Gentleman aware that he has only dealt with the second part of my question, and that the question relates also to other farms and large holdings, the figures of which ought to be available, and which, I understood, he was prepared to ascertain?

SMALL HOLDINGS (REVALUATION).

Major Sir ARCHIBALD SINCLAIR: 18.
asked the Secretary for Scotland the number of applications made to the Land Courts by smallholders in Scotland for revaluation of their buildings and revision of their rents; the total reductions made by the Courts up to the present date in their fair rents and in their annual liabilities for buildings; and the total reductions made in the capital liabilities undertaken by the smallholders?

Mr. ADAMSON: Joint applications have been made to the Scottish Land Court by the Board of Agriculture for Scotland and the holders for the valuation of buildings and the fixing of fair rents in respect of 390 holdings. The awards made to date by the Court cover 343 holdings, and involve the following reductions: capital liability for buildings from £312,204 to £109,688; fair rents from £8,557 to £7,419; and building loan annuities from £6,635 to £4,370. In a few cases the figures are not strictly comparable owing, for example, to variations in acreage at the different dates. As the hon. and gallant Member is aware, the rate of interest payable on the reduced capital liability for buildings is 3⅛ per cent. as compared with 1¼ per cent. on the original amount.

SEED OATS AND POTATOES.

Sir A. SINCLAIR: 19.
asked the Secretary for Scotland how much money has been received from the smallholders for the purchase of seed oats and potatoes unler the scheme of the Board of Agriculture for Scotland; how much has been received from the voluntary funds; and how much of the £100,000 credited to the Board of Agriculture for the purpose of this scheme has been expended?

Mr. ADAMSON: A sum of approximately £40,000 has been received to date from applicants for seed oats and seed potatoes under the Board of Agriculture scheme. Nothing has yet been received by the Board from voluntary funds, and the amount recoverable from the Committee administering those funds will not be known till all the credit slips issued by the Committee to applicants have been received by the Board. The total expenditure on the scheme cannot be
ascertained pending the settlement of outstanding questions as to merchants' accounts and freight and railway accounts.

Sir A. SINCLAIR: Is it not clear that the total expenditure will be substantially less than £100,000?

Mr. MACPHERSON: Does the right hon. Gentleman intend to expend the whole of the £100,000? [HON. MEMBERS: "Answer!"]

CORPUS CHRISTI PROCESSION, CARFIN.

Sir GRATTAN DOYLE: 22.
(on behalf of
asked the Secretary for Scotland who was responsible for giving orders to the local police at Carfin, Lanarkshire, to invoke Section 26 of the Catholic Relief Act of 1829 in order to interfere with the procession on 22nd June, 1924?

Mr. ADAMSON: I understand that the attention of the organisers of the procession was drawn to the provisions of Section 26 of the Act of 1829 by the police in the course of their duty and without instruction or order from any outside authority. In consequence of this intimation the procession was not proceeded with on the public road, but was held in private grounds.

Mr. HOPE: How long is it since any Government has dug this ancient weapon out of its armoury?

Mr. FERGUSON: Is the right hon. Gentleman not aware that the procession carrying the Host is against the law, and that they ought to prosecute them for carrying the Host through the streets?

Mr. ADAMSON: In reply to the right hon. Member for Central Sheffield (Mr. Hope), the Government have no responsibility for this at all, and, as a matter of fact, I did not know of it till the whole matter was over. With regard to the other point raised in the supplementary question, I may say that I hope this question will be discussed to-morrow night on the Motion for the Adjournment, and we need not now discuss it by question and answer.

Mr. FERGUSON: Is it against the law or is it not? I want the right hon. Gentleman to answer.

Mr. LAMB: Can the right hon. Gentleman say if he is aware that the police
definitely stated that they had orders from a higher source, and will he say from what source those orders were received?

Mr. ADAMSON: The police, as I have already stated, had no orders from a higher source.

Mr. MAXTON: In the original answer given by the right hon. Gentleman to the House, he told us that it was due to the danger of obstruction, etc. Do I understand that the Act of 1829 dealt with questions of obstruction?

Mr. ADAMSON: It is true that in the original answer I pointed out that the police took specific objection, on ground of traffic last year. They discussed that with the authorities involved, and when it was pointed out to the police that they intended to proceed with the procession this year, the organisers received the intimation to which I called attention to-day.

Sir G. DOYLE: Is it the intention of the Government to introduce legislation to repeal these obsolete laws?

Mr. CLYNES: That is a question that requires notice.

FISHING INDUSTRY (LOANS).

Mr. DICKSON: 23.
on behalf of
asked the Secretary for Scotland how many applications have been received from fishermen for loans to buy herring nets; to how many have loans been granted, and for what amount; and whether, seeing that those most in need of assistance are being shut off from it owing to the condition of putting up one half the cost, he is prepared to make any modification in his previous proposals?

Mr. ADAMSON: Since the issue of the scheme last month, 15 applications leave been received, nine have been approved, and five are still under consideration. With regard to the last part of the question, I would refer my hon. Friend to my reply to the question asked on the same point on 24th June by the hon. and gallant Member for Caithness and Sutherland (Sir A. Sinclair).

Mr. DICKSON: Does not the small number of applications received show that the conditions provided are grossly inadequate?

Mr. ADAMSON: It could show the very opposite to the conclusions my hon. Friend has drawn.

Mr. LIVINGSTONE: Is the right hon. Gentleman satisfied with the results of this scheme?

Sir A. SINCLAIR: Has not the Secretary for Scotland got information which shows clearly that the construction placed upon the facts by the hon. Gentleman behind him, the Member for Lanark (Mr. Dickson), is the true one?

Mr. ADAMSON: I have not.

Mr. MILLAR: Will the right hon. Gentleman accede to the representations received by him from his Scottish colleagues to make it a workmanlike scheme?

WATER SUPPLY, GARSCADDEN.

Mr. DICKSON: 25.
on behalf of
asked the Under-Secretary to the Scottish Board of Health whether he has received a Report on the impure water supply of Garscadden, in the parish of New Kilpatrick, Dumbartonshire; if he is aware that the water tank is badly out of repair; that the roof thereof has fallen in and been left to rot in the water; that adjoining the water tank there are manure-covered fields, closets and refuse heaps; and that the water supply is being contaminated by these; and if he will, in the interests of public health, undertake to send an inspector to the district to submit an immediate report?

Mr. ADAMSON: I have no recent information as to the condition of the Garscadden water supply. The Scottish Board of Health, however, are calling for an immediate report on the matter from the local authority. On receipt of that report, the suggestion contained in the last part of the question will receive consideration

Oral Answers to Questions — TRADE AND COMMERCE.

TRADING PROFITS.

Mr. BAKER: 1.
asked the President of the Board of Trade whether, in connection with the proposal to introduce legislation to deal with trading profits, he will have regard to the fact that a well-known firm of caterers made profits of £396,684 in 1920, £503,323 in 1921, £595,615 in 1922, and £631,816 in 1923, paid ordinary dividends in these years of 42½ per cent.,
42½ per cent., 25 per cent., and 25 per cent., respectively, and two years ago distributed a 100 per cent. share bonus?

The PRESIDENT of the BOARD of TRADE (Mr. Webb): I am aware of the particular case to which my hon. Friend refers. In considering the possibility of legislation, and the lines on which it should proceed, all relevant facts will be taken into account.

Mr. BAKER: Has the right hon. Gentleman's attention been called to a recent announcement that another company is proposing to distribute £8,000,000 in bonus shares, and in these circumstances is not the matter urgent?

Mr. WEBB: I am aware of that statement, but am afraid that I am not able to add anything to the answer which I have given.

Sir KINGSLEY WOOD: Is it not the policy of the Government to encourage private enterprise?

DOMINION TRADE (RATE OF EXCHANGE).

Lieut. - Commander KENWORTHY: 8.
asked the President of the Board of Trade if he has received a resolution passed by the Empire Congress of the Chambers of Commerce drawing attention to the great handicap to trade between Great Britain, Australia, New Zealand and South Africa, and vice versa, owing to the rate of exchange; if he is aware that this rate of exchange is equal to an export tax on wool and other commodities from these countries of 3 to 3½ per cent.; and whether any steps can be taken in the matter?

Mr. WEBB: The resolution referred to has not yet reached me. As I indicated in a reply to a question asked on 14th May, by the hon. Member for the Ilford Division (a copy of which I am sending the hon. and gallant Member), my attention has been directed to the recent level of the exchanges referred to. The question of overseas exchange was fully discussed at the Imperial Economic Conference, and I understand that the Commonwealth Government have recently taken action in the direction there recommended. It is not a matter with which it is within my power to deal.

Lieut.-Colonel JAMES: Is it a fact that the right hon. Gentleman has received a communication from the Dominions in
regard to other important matters at the Economic Conference which have been turned down?

Mr. WEBB: I am afraid on a general question of that kind I must have notice.

GERMAN LEATHER GOODS.

Sir FRANCIS WATSON: 9.
asked the President of the Board of Trade if, in view of the report of the German Ministry for economic affairs with regard to the stale of the leather trade in Germany, and in view of the danger of surplus German leather goods being dumped in this country, he is prepared to take any action in the matter?

Mr. WEBB: If the hon. Member can furnish me with fuller particulars of the report to which he refers, I shall be glad to receive them; but at present I do not see that any action on the part of the Government is possible.

Sir F. WATSON: Has not the right hon. Gentleman access to the report which has been issued?

Mr. WEBB: No such report has been received at the Board of Trade nor, so far as I can ascertain, at the other Departments. I have seen statements in the newspapers purporting to relate to some such report, but it is not clear what report it is.

Mr. REMER: Will the right hon. Gentleman take steps to obtain the report?

Mr. WEBB: I will inquire.

Oral Answers to Questions — CLYDE PASSENGER STEAMERS (HOURS OF LABOUR).

Mr. KIRKWOOD: 2.
asked the President of the Board of Trade if he can now inform the House of the result of the negotiations with the railway companies whose passenger steamers ply on the River Clyde in respect of the hours of labour worked by engineers and stokers upon these steamers; if he can say how many unemployed engineers could be absorbed into employment if the railway companies observed a 48-hour working week; and if he is aware of the urgency of this question, in view of the holiday season being already well advanced?

Mr. WEBB: I understand that the matter is being carefully gone into by the companies, but I am sorry I am not yet in a position to give the hon. Member the information for which he asks. As regards the latter part of the question, I would refer him to the answer given to him on 26th June.

Mr. JOHNSTON: Is the right hon. Gentleman aware that in another eight weeks' time the summer season will have passed, and if he is going to do anything this summer he must do it now?

Mr. WEBB: I am afraid it is not possible to do anything except try to influence the railway companies concerned. I have no reason to doubt that they are taking the matter into very careful consideration, but it is not possible to re-arrange a service of this kind at a moment's notice.

Mr. HANNON: Could we have the names of the railway companies concerned?

Oral Answers to Questions — BRITISH SHIPOWNERS (DUTCH SUBSIDY).

Sir W. LANE MITCHELL: 5.
asked the President of the Board of Trade if he will state the nature of the subsidy given to British owners to enable them to get three steamers built in Holland?

Mr. WEBB: The question appears to be based on a misunderstanding. The subsidy to which reference was made has been given by the Dutch Government to Dutch shipbuilders.

Oral Answers to Questions — BANKRUPTCY COMMITTEE.

Mr. HANNON: 10.
asked the President of the Board of Trade whether it is proposed to publish the evidence given before the Bankruptcy Committee; and when he anticipates that the Report of the Committee will be ready for publication?

Mr. WEBB: The Committee have only recently begun their inquiry, and I cannot say when they will be in a position to report. The question of publishing the evidence will be considered at a later stage.

Oral Answers to Questions — BRITISH ARMY.

PENSIONERS (RECALL TO COLOURS).

Major HORE - BELISHA: 12 and 14.
asked the Secretary of State for War (1) whether the Regulations published in the Royal Warrant for Pay, 1914, and on Army Form D 446, concerning the recall of Army pensioners to the Colours in case of national emergency, were cancelled before the outbreak of War; and if such cancellation was published in Army Orders and the public Press;
(2) whether, seeing that both the pay warrant and the pension papers of pre-War pensioners stated quite definitely that these pensioners were liable to recall in time of national emergency up to the age of 50 years, and on their failing to do so they would forfeit their pensions, it is now admitted that these Regulations were of doubtful legality; and, seeing that many commanding officers issued telegraphic instructions to pensioners to return to the Colours after the outbreak of the great War, Whether the War Office will regard these Regulations as binding, and deal with these. Army pensioners in the same manner as the Admiralty treated the naval and marine pre-War pensioners at the end of hostilities?

The UNDER-SECRETARY of STATE for WAR (Major Attlee): The answer to question No. 12 is in the negative. As regards question No. 14, I think my hon. and gallant Friend is under some misapprehension. The Royal Warrant for Pay, etc., of 1914 purported to render Army pensioners liable to recall and reenlistment on emergency, and further provided that re-enlisted pensioners should draw pension and pay concurrently, but should not count their re-enlisted service towards an increase of pension. In the great War many pensioners re-enlisted voluntarily, but the liability to compulsory recall was of doubtful legality and was, therefore, not enforced by the War Office. I am not aware whether this liability was ever regarded by any commanding officer as enforceable, as my hon. and gallant Friend suggests, but, if so, that fact gave the pensioner concerned no title to be treated as regards his pay and pension otherwise than under the Army Pay Warrant, the provisions of which still fully covered his case. The Navy Regulations were different, and are inapplicable to soldiers.

OFFICERS' PENSIONS.

Mr. J. HARRIS: 16.
asked the Secretary of State for War if officers have been awarded modified pensions under the terms recommended in paragraph 32 of the Report of the Ex-Ranker Officers' Committee; and, if so, whether such officers have been permitted to retain war gratuities granted to them according to the commissioned rank held on demobilisation?

Major ATTLEE: Yes, Sir. The Army Council have sent to the Commissioners of Chelsea Hospital all applications which fall to be considered under paragraph 32 of the Report. Their gratuities as temporary officers are taken into account in the assessment of their soldier's pensions, just as was done in the case of soldiers who, by counting temporary commissioned service, were able to make 21 years' service for pension under Army Order 446 of 1920.

BARRACK WARDENS.

Lord APSLEY: 15.
asked the Secretary of State for War what is the reason for the regulation that under no circumstances can candidates be registered for appointment as barrack labourer after they have reached the age of 45 years unless their substantive rank on leaving the service was not less than warrant officer, Class 1?

Major ATTLEE: I presume that my Noble Friend intends to refer to barrack wardens, and not to barrack labourers. The reason for the rule in question is that it is desired that the men appointed shall not have left the Army too long before, so as to be cut of touch with current Service customs and regulations. Notwithstanding the rule referred to, the number of candidates is out of all proportion to that of the vacancies.

Oral Answers to Questions — INDIA.

ARMY NATIVE LABOUR (ALLOWANCE).

Major HORE-BELISHA: 13.
asked the Secretary of State for War whether he is aware that it is the custom in the British Army in India for the menial work of the various regiments, such as lavatory cleansing, water carrying, etc., to be carried out by native labour, and that the Indian Government make an allowance to pay for suitable native labour to carry
out this work in all the depots where British regiments are stationed; that at some of the temporary depots and hospitals where military rank and file are stationed there are no allowances, and the work has to be done by the Royal Army Medical Corps unit, who, if they wish to avoid such work, have to pay from their own mess funds and by subscriptions from the unit for the necessary work to be done; and that there is great feeling among the officers and ranks of the Royal Army Medical Corps in regard to this anomaly; and will he see whether it can be removed?

The UNDER-SECRETARY of STATE for INDIA (Mr. Richards): I have been asked to reply. I have no information on this subject and will have inquiries made if the hon. Member will be so kind as to give me the names of the places to which he refers.

ARMY OFFICERS (PAY).

Viscountess ASTOR: 64.
asked the Under-Secretary of State for India whether, in view of the fact that the recent reduction in the pay of British Army officers consists of a 5¼ per cent cut on the 20 per cent. increase granted to meet the higher cost of living, he will reconsider the decision of the India Office to apply the 5¼ per cent reduction to the whole pay of Indian Army officers?

Mr. RICHARDS: The revision of Indian Army rates of pay is still under consideration.

Viscountess ASTOR: Will the hon. Gentleman consider well that Indian officers are among the very poorest of our officers, and that it would be very unfair to charge them on the whole of the pay when this charge is not made to the officers at home?

Mr. RICHARDS: This point has already been brought to the notice of the India Office.

Mr. RAWLINSON: It is a long time ago since we were informed that this question is still under consideration, and can the hon. Gentleman give us the slightest idea as to when any results of his consideration is going to take place, as this is a very serious matter for the Indian officers?

Mr. RICHARDS: In any case the revised rates date from 1st July.

Major HORE-BELISHA: Is it a fact that no reduction has taken place in Indian Army officers' pay?

Mr. RICHARDS: Nothing has been done as yet.

Oral Answers to Questions — BRITISH DEBT (UNITED STATES).

Lieut. - Commander KENWORTHY: 3.
asked the President of the Board of Trade whether he can state the effect of the payments made for the service of the British debt to the United States of America on the trade between this country and the United States of America; and, if so, what is the effect?

The FINANCIAL SECRETARY to the TREASURY (Mr. William Graham): A volume might be written in reply to the hon. and gallant Member's question. I do not think I could be expected to say more in a Parliamentary answer than that one important effect is no doubt to reduce the amount which this country can lend abroad.

Lieut. - Commander KENWORTHY: Cannot the hon. Gentleman give me one of his famous short answers? Is it having a good or a bad effect on our trade?

Mr. W. A. JENKINS: Will the hon. Gentleman make representations to America with a view to making better terms or cancelling our debt altogether?

Mr. HOFFMAN: Has not the increased price of grain occurred by reason of the payment of this debt?

Lieut. - Commander KENWORTHY: This is the first example we have of a modern great payment between States. Cannot the Government tell us whether it is having a good or a bad effect on our trade?

Oral Answers to Questions — GOVERNMENT SURPLUS TEXTILE MATERIALS.

Mr. HANNON: 11.
asked the President of the Board of Trade whether he can state the amount of Government surplus textile materials still held by the Government; the amounts which have been disposed of; and the estimated amount passed on to the trade but still on the market?

Mr. GRAHAM: I have been asked to answer this question. All surplus Government textiles formerly in the hands of the Disposal Board have been sold. I regret that separate figures of the sales of textiles are not available, and that with the depleted clerical staff it is not possible to undertake this compilation. The total sales of textiles, leather and equipment from the Armistice up to 30th June amounted to £32,404,900. I have no information with regard to the last part of the question.

Mr. HANNON: Can the hon. Gentleman give an approximate figure of the loss to the taxpayer on this transaction?

Mr. GRAHAM: No, I could not possibly make any statement on that without investigation.

Mr. MAXTON: Do we understand the hon. Gentleman to say that his staff is too small to put through the necessary work of his Department?

Mr. GRAHAM: No, that is not implied. The reply is that we have not the staff to undertake a detailed investigation of this kind.

Oral Answers to Questions — COLLIERIES CLOSED, DURHAM.

Mr. BATEY: 26.
asked the Secretary for Mines if he will institute an inquiry into the reason why collieries are being closed in Durham county and the miners thrown out of employment?

The SECRETARY for MINES (Mr. Shinwell): Such information as I have indicates that any closing of mines that has recently taken place in Durham is temporary, and due to want of trade The conditions are not peculiar to Durham, and no useful purpose would be served by instituting a special inquiry.

Mr. BATEY: Is the hon. Gentleman not aware that several collieries have been closed, that the men cannot get work, and that it ought not to be left to the coal-owners to close down without any consideration for the men?

Mr. SHINWELL: I am quite aware of the facts in connection with the closing of mines in the Durham area, but we have no powers to deal with the owners in regard to the question of the closing down of mines.

Mr. BATEY: Will the Minister see that he gets power to deal with these owners?

Viscountess ASTOR: How can the Minister make people buy coal?

Mr. SHINWELL: That question by the Noble Lady has no relation, I am afraid, to the question with which we are dealing.

Viscountess ASTOR: Yes, it has.

Mr. SHINWELL: It is a question of power to compel coalowners to continue operations, and that is one which requires very careful consideration.

Sir FREDRIC WISE: Can the hon. Gentleman say how many pits have been closed in the County of Durham?

Mr. SHINWELL: I cannot give the figures offhand.

Sir F. WISE: Roughly.

Mr. SHINWELL: I am afraid I cannot say offhand. I shall be pleased to furnish the figures if the hon. Member will put down a question.

Mr. BATEY: Shall I give them?

Mr. W. A. JENKINS: Is the hon. Gentleman aware that these conditions apply in Wales, where collieries are working short time, and that it is due to the fact that France is taking a large amount of reparation coal? Will the Minister suggest to the Prime Minister that that should be taken into account in the forthcoming Conference?

Mr. SHINWELL: I am afraid that reparation coal, although it does affect certain areas, does not affect them all. Some areas that are not affected by reparation coal are in a worse position than the Durham and South Wales areas.

Sir K. WOOD: rose—

Mr. SPEAKER: We cannot have a general discussion.

Oral Answers to Questions — MOTORISTS (COMPULSORY INSURANCE).

Mr. BAKER: 28.
asked the Minister of Transport the exact nature of the practical and administrative difficulties which prevent him considering the necessity of compelling motorists to insure against accidents; and whether he will have the problem carefully examined, with a view to legislation at the earliest possible date?

The MINISTER of TRANSPORT (Mr. Gosling): The issues involved do not admit of adequate treatment by way of question and answer, but I believe my hon. Friend has had an opportunity of discussing the matter fully with an officer of my Department.

Oral Answers to Questions — TRANSPORT.

UNDERGROUND RAILWAYS, GLASGOW.

Mr. KIRKWOOD: 29.
asked the Minister of Transport if, in view of the present condition of underground railway systems in and around Glasgow, he can bring any pressure upon the railway companies concerned to have these systems electrified so as to bring them up to modern requirements, and thus provide useful work for thousands of unemployed skilled and unskilled workers?

Mr. GOSLING: I have brought this matter to the notice of the railway companies concerned and I am informed by the London, Midland and Scottish Railway Company that the question of the electrification of the Glasgow Underground Railway systems has received consideration, but that there is no prospect of securing such additional traffic at the present time as would justify the large expenditure involved. The company add that the matter will, however, be kept under notice and reviewed from time to time in the light of changing circumstances.

Mr. KIRKWOOD: Seeing that this scheme would employ a great number of skilled and unskilled workers in and around Glasgow, would the hon. Gentlemen's Department be prepared to assist this work, financially?

Mr. GOSLING: I should like to see the railway company about that in the first instance.

Mr. W. THORNE: is the hon. Gentleman aware that the same railway company has had powers to deal with another railway in London and that they have never moved a peg yet?

Mr. HARDIE: In view of the hon. Gentleman's statement that the traffic does not justify the expenditure, may I ask whether the company are aware from the evidence already taken that the electri-
fication of the railway would bring all the traffic necessary to pay for the expenditure?

ROAD REFUGES, WESTMINSTER AND SOUTHWARK.

Mr. NAYLOR: 30.
asked the Minister of Transport whether his attention has been called to the need for a road refuge at the northern end of Westminster Bridge facing the pier steps; and, if not, whether he will make inquiries as to the practicability of such provision.

Mr. GOSLING: As at present advised, I doubt the expediency of increasing the number of refuges at the point mentioned, but as the matter primarily concerns the highway authorities, I would suggest that, if my hon. Friend desires to pursue the matter further, he should address his representations to them in the first instance.

Mr. NAYLOR: 31.
asked the Minister of Transport whether he has received a communication from the Southwark coroner with reference to the need for road refuges in certain parts of that borough; and whether he proposes to take any steps towards securing the greater safety of foot passengers which such refuges afford?

Mr. GOSLING: I have received communications on this subject, which primarily concerns the local highway authorities. I am advised, however, that the construction of additional refuges in parts of Camberwell has not always led to the desired result. I am most anxious to secure the safety of foot passengers, and I hope that the Advisory Committee on London Traffic, if set up, will assist in this as other matters.

SEVERN NAVIGATION.

Colonel Sir CHARLES YATE: 32.
asked the Minister of Transport whether, in view of the need for additional transport facilities, he will consider the question of re-opening the River Severn to navigation as it was in former days?

Mr. GOSLING: The responsibility for the maintenance of the Severn navigation rests with the Severn Commissioners, and I have received no complaints to the effect that the navigation is not being maintained. I should be glad, however, if the hon. and gallant. Member would take an opportunity of explaining to me more fully what is in his mind.

Sir C. YATE: Is the hon. Gentleman aware that, within the memory of man, the Severn was navigable right up to Shrewsbury; and will he make inquiries and see whether anything can be done?

Mr. HANNON: Is the hon. Gentleman aware that the Severn Commissioners are now in debt to the tune of several hundred thousand pounds?

RAILWAY RATES TRIBUNAL (WORKMEN'S FARES).

Lieut. - Commander FLETCHER: 34.
asked the Minister of Transport if the Railway Rates and Charges Tribunal have in hand the consideration of a statutory schedule of workmen's fares; and, if so, when this tribunal may be expected to report?

Mr. GOSLING: The amalgamated railway companies have, in accordance with the provisions of the Railways Act, 1921, submitted to the Railway Rates Tribunal schedules of standard charges proposed to be made, including a schedule of charges for the conveyance of workmen. Before settling the schedules of charges, and appointing a day when the same shall come into operation, the Railway Rates Tribunal are proceeding to determine the standard revenue of each amalgamated company and other preliminary matters, upon which the tribunal is now engaged. I am, therefore, unable to say when the tribunal will be in a position to fix the charges for the conveyance of workmen.

TRADE NUMBER PLATES.

Captain Viscount CURZON: 36.
asked the Minister of Transport whether his attention has been drawn to the action taken by the police and the Woburn bench for the technical infringement of regulations made by his Department in respect of the use of red or trade number plates; what are the regulations issued for the use of trade number plates; whether any special instructions have been sent to the police for their guidance in connection with technical breaches of such regulations; and, if so, what is their nature?

Mr. GOSLING: I have no information on the proceedings referred to in the first part of the question beyond what has happened in the public Press. I am sending
the Noble Lord for his information copies of the Road Vehicles (Trade Licences) Regulations, 1922, and of Circulars issued in connection with them.

Viscount CURZON: Is the hon. Gentleman aware that, as a result of the action taken in this case, a motorist was fined £7 for giving an unemployed workman a lift? That is the result of the working of his Regulations. Cannot something be done about that?

Mr. GOSLING: When the Noble Lord has read the Regulations, perhaps he will show me where that comes in.

Viscount CURZON: I know the Regulations quite well.

LEVEL CROSSINGS (ARTERIAL ROADS).

Viscount CURZON: 37.
asked the Minister of Transport whether it is intended to take any steps to eliminate any of the level crossings across the more important arterial roads wherever possible; and whether he is aware that this work would be invaluable for the relief of unemployment?

Mr. GOSLING: I have nothing to add to the answer which I gave to the Noble Lord on the 3rd June, regarding the assistance tendered from the Road Fund to local authorities desiring to eliminate level crossings.

Viscount CURZON: Are the Government really in earnest in trying to provide work for the unemployed or are they not? Here is a suggestion worth examining. Why cannot they do something about it?

Mr. GOSLING: There is no question of the earnestness of the Government. There is a question of the earnestness of the railway companies.

Viscount CURZON: Is the hon. Gentleman not aware that if he could give the railway companies some assurance of earnestness, and would contribute to the cost, something might be done? At present the Government are doing nothing.

Colonel ASHLEY: Has the hon. Gentleman made a definite over to the railways of some contribution?

Mr. GOSLING: No.

Colonel ASHLEY: Will the hon. Gentleman do so, and so bring the matter to a definite issue?

Mr. PALMER: Has the hon. Gentleman any evidence of any proposal by any local authority, and, if so, will he deal with it?

Mr. GOSLING: Unless some proposal be put to me, I have nothing to consider.

Mr. W. THORNE: Is it not a fact that the Minister has no power at all over the railway companies?

GREAT NORTH ROAD (ACCIDENTS).

Viscount CURZON: 38.
asked the Minister of Transport how many accidents are known to have occurred on the Great North Road, near Eaton Socon, which are directly attributable to the slippery nature of the road surface immediately after rain; and how many casualties have resulted?

Mr. GOSLING: I regret that I have not any information as to the number of accidents from the cause suggested, but I will endeavour, however, to collect whatever particulars are available of any accidents on the length of road indicated and will communicate them to the Noble Lord.

Viscount CURZON: Will the hon. Gentleman make particular inquiry into the case in which a motor lorry filled with workmen was wrecked, entirely owing to the slippery state of the road, as this was a very serious accident and eight men had to go to hospital as a result?

ROADSIDE TREE PLANTING.

Colonel ASHLEY: 40.
asked the Minister of Transport whether the Government have decided to introduce a Bill giving power to the Minister of Transport and certain local authorities to plant trees by the roadside; whether any other matters of an uncontroversial character will be included in this Bill; and, if a Bill is to be brought in, will he endeavour to pass the Bill through all its stages before the summer recess, in view of the approach of the tree-planting season?

Mr. GOSLING: I am to-day introducing a Bill conferring powers on the Minister of Transport, and on all highway authorities, to plant trees and shrubs by the roadside. I hope that the right hon. and gallant Member who has always so forcibly advocated this improvement to roads will find the proposals satisfactory. The Bill will also include Clauses enabling the Minister to conduct experiments in
connection with road and bridge construction, to make inquiries into road accidents, and to assist local authorities in the erection of direction posts and warning signs and in the abolition of tolls on roads and bridges. I hope that the matters covered by the Bill will be regarded as uncontroversial, and that I may have the assistance of the House in passing it into law during the present Session.

Lieut.-Colonel JAMES: Will the authorities at Kew or some similar place be consulted in regard to what are suitable trees for planting?

Mr. GOSLING: I regard that as a very important suggestion.

Sir C. YATE: And the hon. Gentleman will not forget the apple trees?

Major WHELER: In reference to the question of tolls on bridges, will the hon. Gentleman bear in mind that there are bridges in Kent on which a toll of 1s. 6d. has to be paid every time a motor car goes over them, and that tolls are levied on every vehicle and foot passenger, and will he take steps to see that there is power in the Bill to deal with these cases?

Mr. SPEAKER: That cannot be debated until the Bill is brought forward.

CHERTSEY ARTERIAL ROAD (NEW BRIDGES).

Mr. BECKER: 35.
asked the Minister of Transport when the Chertsey arterial road will be continued across the Thames; and where it is proposed to place the new bridge?

Mr. GOSLING: As I informed the hon. Member on the 27th May, no definite agreement has yet been reached with the road authorities for the actual construction of the new Chertsey road beyond the section already formed in Chiswick. Two new bridges will be required across the Thames—one to connect the Lower Richmond Road with the section of new road in Chiswick—and another in the neighbourhood of the present railway bridge at Richmond.

Mr. BECKER: What is stopping this? Will steps be taken to proceed this year or early next year?

Mr. GOSLING: Negotiations are going on.

Lieut.-Colonel JAMES: Is it not a fact that the construction of these bridges would give a great deal of employment to men who are at present unemployed?

Mr. GOSLING: It would be a very useful help.

Oral Answers to Questions — POST OFFICE.

BRITISH BROADCASTING COMPANY (LICENCE FEES).

Mr. BAKER: 41.
asked the Postmaster-General whether he is aware that the amount paid to the British Broadcasting Company on account of licence fees up to 31st March, 1924, was £105,483; whether the anticipated revenue for licence fees for the year ending March, 1925, is £400,000; and whether he will carefully consider the desirability of reducing the cost of the licences or alter the proportion payable to the British Broadcasting Company?

The POSTMASTER-GENERAL (Mr. Hartshorn): The total amount payable to the company in respect of licences issued up to the 31st March, 1924, is about £432,000; but payment is made by monthly instalments in arrear, and the amount actually paid by the 31st March last was £71,450. The amount payable to the company in respect of licences issued during the 12 months ending the 31st March, 1925, is expected to be about £400,000. The fee for constructors' licences—which form the bulk of the licences hitherto issued—was reduced from 15s. to 10s. on the 1st instant, with the consequence that the company's share is reduced from 12s. 6d. to 7s. 6d. The considerations mentioned in the last part of the question will not be lost sight of; but at the present stage it would, I think, be premature to assume that the revenue of the company will be more than is necessary to provide an efficient broadcasting service.

Mr. BAKER: Has the right hon. Gentleman decided to increase the remuneration of the directors of the British Broadcasting Company?

Mr. HANNON: Is not the Broadcasting Company giving very full satisfaction to the public at present, or has the right hon. Gentleman received any complaints?

REGISTERED POSTAL PACKETS (THEFTS).

Sir JOHN PENNEFATHER: 42.
asked the Postmaster-General if he is aware that over 3,000 postal sorters are alarmed at the possibilities under the present system of being wrongfully charged with the theft of registered postal packets, and are desirous of laying their views before him; and will he agree to receive a deputation from them at an early date?

Mr. HARTSHORN: I have arranged to receive a deputation.

WELLINGTON POST OFFICE, SALOP.

Mr. NIXON: 43.
asked the Postmaster-General if he is aware that the post office accommodation at Wellington, Salop, is inadequate; that previous to the War it was decided to remove the post office to larger premises, but, owing to the War, the matter was postponed; and, seeing that the town has grown considerably, will he now take steps to provide a larger and better post office in the town?

Mr. HARTSHORN: The need for a new post office at Wellington, Salop, is fully recognised, and provision for the new building has been made in the current Revenue Buildings Estimates. A site has been acquired, and it is hoped to make a start on the building work this year.

TELEPHONE SERVICE STAMFORD HILL.

Mr. J. HARRIS: 44.
asked the Postmaster-General whether his attention has been drawn to the difficulty which residents of Stamford Hill are experiencing in securing a telephone service; whether he is aware that some of these residents have been waiting for periods of over three months in order to obtain an installation of a telephone; and what action does he propose to take in the matter?

Mr. HARTSHORN: So far as I am aware all demands for telephone service in the Stamford Hill district are met on the average in less than three weeks; and I shall be glad if the hon. Member will give me particulars of the cases to which he refers where residents have been waiting for three months

Mr. HARRIS: Is it not on record in the right hon. Gentleman's Department that one potential subscriber at least has been waiting for five months?

Mr. HARTSHORN: I received a communication from my hon. Friend relating to, I think, Mr. Woolaston. I have made inquiries and there is no record in any of the branches of the Department of this gentleman having made application. He can be supplied with a telephone if he desires it, and I have directed the officials to ascertain as to this.

Mr. HARRIS: May I send the right hon. Gentleman the correspondence?

Major HORE-BELISHA: Is the right hon. Gentleman aware that there is a great conflict between the information in the possession of his Department and the experience of people who make complaints, and will he take steps to ascertain the point of view of the consumer?

Mr. HARTSHORN: I have stated before that I should be very pleased—if hon. Members will supply me with particulars—to have what is necessary done in cases where there is real cause for complaint.

SAVINGS BANK DEPOSITS.

Mr. D. G. SOMERVILLE: 58.
asked the Postmaster-General what sum is now in the Post Office savings banks as compared with the sum at the end of June, 1923 and 1922, respectively, and what number of new depositors have been recorded this year to date, and how many have withdrawn?

Mr. HARTSHORN: The approximate balance due to depositors on the 30th June, 1924, was £274,000,000. The corresponding amounts for the 30th June, 1923 and 1922, respectively, were £270,000,000 and £260,000,000. 677,000 fresh accounts have been opened since the 1st of January, 1924, and 376,000 accounts have been closed during the same period.

TELEPHONE SYSTEM.

Sir HARRY BRITTAIN: 59.
asked the Postmaster-General whether, in view of the great saving of time gained by the toll telephone system, he can inform the House whether it has been decided to enlarge the area so served?

Mr. HARTSHORN: The capacity of the present toll exchange will not admit of any addition to the number of exchanges
included within the toll area; but it is in contemplation to provide a new toll exchange, and the area at present served by the system will then be considerably enlarged, so as to include many additional places within 50 or 60 miles of London.

Mr. D. G. SOMERVILLE: 57.
asked the Postmaster-General if he can state the results of the wireless telephone experiments which have been carried out in recent time with America?

Mr. HARTSHORN: The results of the experiments at present available are encouraging. They are described in detail in an official notice recently issued, of which I am sending the hon. Member a copy.

Sir H. BRITTAIN: 60.
asked the Postmaster-General whether, in order to enable Members of Parliament so desirous thoroughly to understand the working of a large modern telephone exchange, he is prepared to issue invitations for visits to be paid to a convenient exchange in the neighbourhood of Westminster?

Mr. HARTSHORN: If any hon. Member who is desirous of visiting an exchange in London will indicate his wishes to me, I will gladly make the necessary arrangements, when a full explanation of the practical working of the system will be given.

Oral Answers to Questions — SECRETARY OF STATE FOR THE COLONIES.

Mr. BARNES: 45.
asked the Prime Minister, in view of the Dominion status of many parts of the Empire, he will consider the advisability of describing the Secretary of State for the Colonies in future as the Secretary of State for the Dominions and Colonies?

The LORD PRIVY SEAL (Mr. Clynes): The question of altering the title of Secretary of State for the Colonies has come under consideration from time to time during the last few years, but it has always been felt that there is no pressing need—nor indeed desire—for a change.

Oral Answers to Questions — UNEMPLOYMENT (NECESSITOUS AREAS).

Mr. TREVELYAN THOMSON: 46.
asked the Prime Minister whether, seeing that the Government have refused to give special grants to necessitous areas where unemployment is above the average of the rest of the country, he will authorise the Unemployment Grants Committee to give more sympathetic consideration to schemes for the employment of the workless submitted by local authorities under existing regulations?

Mr. CLYNES: Special consideration is already being given to schemes submitted by local authorities of areas with excessive unemployment, and also to schemes submitted by other local authorities where these are calculated to provide work in such areas.

Mr. HOPE: May I suggest that special consideration should be given to those areas where there is a large working-class population who are unable to obtain work?

Mr. CLYNES: That suggestion is well worth consideration.

Mr. THOMSON: Will instructions be given that more sympathetic consideration should be extended in future than has been given in the past to reducing the standard and in giving more grants?

Mr. CLYNES: I will present that view in the proper quarter.

Lord H. CAVENDISH-BENTINCK: Is the right hon. Gentleman aware that a grossly unfair proportion of these cases is being thrown on the local authorities, and that the Chancellor of the Exchequer has always refused to take his proper share of the burden?

Oral Answers to Questions — HOUSING.

MINISTER OF HEALTH (ECONOMIC VIEWS).

Mr. FRANKLIN: 48.
asked the Prime Minister whether his attention has been called to the economic views of the Minister of Health on housing, as set out in the "New Age"; whether these views represent the opinion of the Government; and whether he will arrange that the Chancellor of the Exchequer will be in attendance on committees to explain their
application, in the same way as the legal advisers to the Government are present to explain legal difficulties?

Mr. CLYNES: I assume that the hon. Member is referring to an interview in "The New Leader," in which, so far as I can see, my right hon. Friend did no more than supply a number of quite definite facts and figures, for the understanding of which the presence of the Chancellor of the Exchequer does not appear to be necessary.

Mr. FRANKLIN: Owing to the unsatisfactory nature of the reply, I beg to give notice that I shall raise this matter on the Committee stage of the Bill.

Sir K. WOOD: Will the right hon. Gentleman ascertain from the Minister of Health why he is expressing these sentiments at the same time as he is about to make an appeal to the local authorities and private persons to let him have money to get on with housing?

RICHBOROUGH.

Mr. D. G. SOMERVILLE: 56.
asked the Financial Secretary to the Treasury whether the Government has sold all the vacant houses at Richborough, and whether, in that case, any attempt was made to let them prior to such sale?

Mr. GRAHAM: No vacant houses have been sold at Richborough by the Government, and no houses are vacant at present.

WOODEN HOUSES.

Lieut. - Commander FLETCHER: 69.
asked the Minister of Health what is the cost, life and time taken to erect, of the Government housing-scheme house erected in wood, and the same house erected in brick?

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Mr. Arthur Greenwood): The cost of houses of any form of construction varies considerably, but under normal conditions, with the same standard of fittings and completion, very little saving is found to be effected by the adoption of wooden forms of construction. In a recent case a local authority considering the use of wooden buildings found that the cost of the wooden houses came out at £460, as compared with £385 for houses similar in accommodation being built in brick. The time taken to erect either brick or timber
houses varies considerably; in building the timber house three weeks to a month may, on the average, be saved in the erection of the shell, but ordinarily there would be no saving in time on the remainder of the work which would be much the same. The life of a brick house is commonly held to warrant a loan period of 60 years. As to the timber houses, although certain timber houses have had a long life, the general experience is that the effective life cannot on average be put higher than 40 years, and it is frequently much shorter.

Mr. E. BROWN: Were the experimental houses to which the hon. Gentleman refers built in an urban or a rural area?

Mr. GREENWOOD: I could not say without notice, but I imagine in a rural area.

Lieut.-Colonel LAMBERT WARD: Where did the hon. Gentleman get these figures? Are they the result of actual experience or merely estimates?

Mr. GREENWOOD: No, I think they are derived from actual cases of houses built.

Mr. D. G. SOMERVILLE: Can we have the source of the information?

Mr. BECKER: If the hon. Gentleman went to Canada or the United States, acquired houses already made, and erected them in England, would it not be cheaper than these prices?

Mr. HARMSWORTH: Is there any place where hon. Members can inspect houses such as those with which the experiment has been made?

Mr. SOMERVILLE: Will the hon. Gentleman circulate particulars as to the source of the information?

Mr. GREENWOOD: If the hon. Member desires to put down a question, I will give him the names of the local authorities.

Oral Answers to Questions — FINANCE BILL.

INCOME TAX.

Mr. BARCLAY: 50.
asked the Chancellor of the Exchequer whether he can supply to this House any particulars as to the cost of the collection of Income Tax on wages, and the percentage which this forms of the total revenue so raised?

The CHANCELLOR of the EXCHEQUER (Mr. Snowden): The percentage cost of collection from the small taxpayer is always necessarily high. It tends to increase as the rate of tax is lowered. I regret that I have no materials for isolating the percentage cost of collection of Income Tax as it affects ways in particular. If the hon. Member has specially in mind the percentage cost of collection from those wage-earners who are assessed quarterly, this was estimated for the year 1922–23 as in the neighbourhood of 16 per cent. It has since substantially increased owing to the combined effect of the fall in wages and the fall in the rate of tax.

Major WHELER: 51.
asked the Chancellor of the Exchequer the amount of property tax collected from land under Schedules A and B during the year 1921–22?

Mr. SNOWDEN: I regret that this information is not available as, under the present system of graduation and differentiation of the Income Tax, wall personal allowances, deductions and reliefs appurtenant, not to the various sources of income charged under each Schedule, but to the total income of the taxpayer, the total yield cannot be divided between the respective Schedules. A full explanation of the difficulties involved will be found on page 115 of the 65th Inland Revenue Report. The amounts of actual income assessed under Schedules A and B, respectively, during the year 1921–22 were as follow:

United Kingdom.



£


Schedule A (Ownership of Lands, Houses, etc.)
183,158,769


Schedule B (Occupation of Lands, etc.)
55,977,917

Major WHELER: May I take it from the right hon. Gentleman that it is a very considerable sum?

Mr. SNOWDEN: It is. Under Schedule A it is about £183,000,000, and under Schedule B about £56,000,000.

Major WHELER: Will the right hon. Gentleman take steps to see that the Government Leaflet No. 70, which says, amongst other things, that the landlords will pay no tax on what they receive from the people's land, is withdrawn at once?

Mr. SNOWDEN: I am afraid that I do not know anything about this matter.

Major WHELER: This leaflet, No. 70, is published by the Labour party. It says, "They have no tax to pay on what they draw from the people's land."

Mr. SPEAKER: We cannot go into questions of propaganda.

Major WHELER: When a statement is proved to be incorrect by the right hon. Gentleman's own showing, am I not entitled to ask him to withdraw this leaflet?

Mr. SPEAKER: It is evidently not an official document, and surely the answer just received is sufficient.

Mr. JAMES HOPE: Would it not be in order to ask the right hon. Gentleman if he dissociates himself from this leaflet?

Mr. SPEAKER: Oh, no; parties are prolific in propaganda just now.

SUGAR AND BEER DUTIES.

Mr. HANNON: 53.
asked the Chancellor of the Exchequer whether he can state the amount of the duty paid on sugar, etc., used in brewing; and the net produce of the beer duty in the United Kingdom for the year ended 31st March, 1924?

Mr. GRAHAM: As regards the first part of the question, I can add nothing to the reply on the same subject which my right hon. Friend the Chancellor of the Exchequer gave to the hon. Member for Darwen on the 13th May last. The yield of the beer duty in Great Britain and Northern Ireland in 1923–24 was approximately £81,700,000.

Oral Answers to Questions — NATIONAL DEBT (LORD COLWYN'S COMMITTEE).

Mr. LUMLEY: 52.
asked the Chancellor of the Exchequer whether he will request Lord Colwyn's Committee to issue from time to time the proofs of evidence and cross-examinations of witnesses, without the findings of the Committee, so that the House may be able to study the materials upon which the findings will ultimately be based?

Mr. SNOWDEN: No, Sir. I see no reason to interfere with the usual practice which has generally been found convenient by Committees.

Mr. LUMLEY: Is the right hon. Gentleman aware that the whole of this is a vast volume and that it would be for the convenience of Members of this House, as well as of the public, if the evidence were issued in instalments, so that it could be studied at leisure?

Mr. SNOWDEN: That is entirely a matter for the Chairman or the Committee themselves to decide. I cannot decide it.

Mr. A. M. SAMUEL: What difficulty is there? There should be no difficulty whatever in issuing the interim Report, or rather the cross-examination and the evidence already in print.

Mr. SNOWDEN: It is not for me to say what the difficulties are. This is a matter entirely within the province of the Committee themselves. I cannot decide the matter.

Mr. SAMUEL: Will the right hon. Gentleman obtain the opinion of certain hon. Members on this side?

Mr. PRINGLE: Is it not the case that this is a Departmental Committee, which in the main takes its instructions from the right hon. Gentleman, who has appointed it?

Mr. SNOWDEN: It is quite true that it is a Departmental Committee, but in that respect I am giving to this Committee the ordinary freedom or liberty that is given to such Committees.

Oral Answers to Questions — COMPTROLLER-GENERAL'S RECEIPTS (ADVERTISEMENTS).

Mr. GREENE: 54.
asked the Chancellor of the Exchequer whether he is aware that receipts issued by the Accountant and Comptroller-General (cashier) of Inland Revenue continue to refer the recipients to a statement to the effect that a certain brand of tea is not only the best but the purest and most delicious; who selects the advertisements to be thus displayed; and by what method the selection is made?

Mr. GRAHAM: Yes, Sir. Advertisements are selected by the Controller of the Stationery Office in consultation with the Department concerned with the form.

Oral Answers to Questions — RICHBOROUGH (RAILWAY ACCESS).

Mr. SEXTON: 55.
asked the Financial Secretary to the Treasury whether the agreement for giving railway access to Richborough Port has yet been completed; and, if not, whether he can state what is the cause of the delay?

Mr. GRAHAM: Access from the system of the Southern Railway Company has existed since Richborough become Government property. Negotiations with that company and also with the East Kent Light Railway Company are being proceeded with as rapidly as possible, with a view to entering into new formal agreements regulating traffic arrangements.

Oral Answers to Questions — SHEEP DIPPING.

Mr. R. RICHARDSON: 68.
asked the Minister of Agriculture whether he is aware that in many cases farmers experience difficulty in carrying out the process of dipping their sheep on account of the sheep straying on to moorlands, and access to them being denied; whether in such cases farmers are permitted to go and bring the strayed sheep in; and, if not, whether he can take action to enable them to do so?

The PARLIAMENTARY SECRETARY to the MINISTRY of AGRICULTURE (Mr. W. R. Smith): My right hon. Friend is aware that complaints are sometimes made by farmers that there is difficulty in getting access to their sheep in circumstances similar to those to which my hon. Friend refers. Each case is governed by its own circumstances, but, generally speaking the Ministry has no power to interfere. If, however, my hon. Friend will give me particulars of specific instances, I shall be pleased to have inquiry made.

Oral Answers to Questions — HONG KONG (MAISONS TOLEREES).

Viscountess ASTOR: 65.
asked the Secretary of State for the Colonies whether, with reference to the closing of maisons tolerées in Hong Kong, the fact that no houses have been closed on the complaints of three householders, as allowed for in the Regulations, may be taken to mean that no complaints were received?

The SECRETARY of STATE for the COLONIES (Mr. J. H. Thomas): The
Governor's report made no statement on this point. I will refer the question to him.

Viscountess ASTOR: 66.
asked the Secretary of State for the Colonies whether any new maisons tolerées have been opened in Hong Kong between 1914 and September, 1923; and, if so, whether they were included in the total of 296 such houses reported by the Governor of Hong Kong?

Mr. THOMAS: As has already been stated, the total number of registered brothels in 1923 was 296, but I am not aware of the dates at which any of them were opened.

Oral Answers to Questions — IRISH FREE STATE (INDEBTEDNESS TO GREAT BRITAIN).

Mr. RAWLINSON: 67.
asked the Secretary of State for the Colonies what is the approximate amount of money advanced and price of goods sold or handed over, subject to a subsequent valuation, to the Irish Free State Government since it has been established; and what is the approximate indebtedness, if any, of the Irish Free State to Great Britain at the present time?

Mr. GRAHAM: The right hon. and learned Member will find the latest available information on these points in the statements of the financial position between the British Government and the Government of the Irish Free State contained in Command Papers 1930 of 1923 and 2160 of 1924, which show the position up to the end of the last financial year.

Mr. RAWLINSON: Does that show the approximate amount of the indebtedness of the Irish Free State to Great Britain at the present time? That is what I want to know.

Mr. GRAHAM: I could not say offhand. I think if the right hon. Gentleman looks at the two accounts, copies of which I am sending him, he will find full information there.

Oral Answers to Questions — POOR LAW GUARDIANS (PARENTAL POWERS).

Lieut. - Commander FLETCHER: 70.
asked the Minister of Health if he has received any communications from boards
of guardians urging the desirability of amending Section 1 (1) of the Poor Law Act, 1899, by substituting 21 years for 18 years as the limit of age of vesting of parental powers in the guardians where the guardians consider that such extension of age is desirable in the interests of the person with respect to whom a resolution of vesting is passed; and, if such communications have been received, is it proposed to take any action in the direction indicated?

Mr. GREENWOOD: Yes, Sir, my right hon. Friend has received some communications to this effect, but, as has been said in reply to previous questions, he is not aware of any sufficient ground for introducing legislation for this purpose.

Oral Answers to Questions — FLOUR (PRICE).

Mr. WELLS: 6.
asked the President of the Board of Trade what action he proposes to take, in view of the fact that there has been a steady rise in the price of bakers' flour since last December, to prevent a further rise in price so as to check another increase in the price of bread?

Mr. WEBB: The recent rise in the price of flour is consequential upon an advance in the price of wheat, and I fear that what the hon. Member suggests is beyond the power of the Board of Trade.

Mr. D. G. SOMERVILLE: Can the right hon. Gentleman state the cause of the increase in the prices of wheat?

Oral Answers to Questions — TREATY OF MUTUAL GUARANTEE.

Mr. AUSTEN CHAMBERLAIN: by Private Notice
asked the Deputy-Leader of the House whether he can communicate to the House the nature of the reply sent by His Majesty's Government to the League of Nations on the subject of the Treaty of Mutual Guarantee, and whether a copy of the reply will be presented to the House.

Mr. CLYNES: It is hardly possible to give a fair and an adequate account of the reply within the limits of an answer to a question. The text will be laid before the House as soon as possible.

Mr. CHAMBERLAIN: When the text is laid, will the right hon. Gentleman also lay any communications that may have passed with, or any expressions of opinion received from, the Dominions on this subject?

Mr. CLYNES: Since receiving notice of the question, I have not had time to go into that aspect of the matter, but personally I see no objection to taking the course suggested.

Oral Answers to Questions — NEW MEMBER SWORN.

Captain Tufton Percy Hamilton Beamish, R.N., C.B., for County of East Sussex (Lewes Division).

BILLS PRESENTED.

RATING RETURNS BILL,

"to enable overseers and assessment committees (outside the Metropolis) to obtain Returns," presented by Mr. RAWLINSON, to be read a Second time upon Friday 25th July, and to be printed. [Bill 206.]

ROADS IMPROVEMENT BILL,

"to make further provision for the improvement of roads and for purposes connected therewith," presented by Mr. GOSLING; supported by Mr. Buxton; to be read a Second time upon Monday next, and to be printed. [Bill 207.]

SCOTTISH STONE OF DESTINY.

Mr. KIRKWOOD: I beg to move,
That leave be given to bring in a Bill to provide for the removal of the Scottish Stone of Destiny from Westminster Abbey to Holyrood Palace, Edinburgh.
Tradition says that this is the Stone that Jacob had for a pillow at Bethel, when he was fleeing before his brother Esau, as a result of his having stolen Esau's birthright. It was taken by Jacob's family into Egypt, or, according to the Bible, at that time into the Land of Goshen, a part of Egypt, and it was in the possession of the Kings of Egypt for a considerable time. It was taken from Egypt to Ireland. It was on Tara's Hill 700 B.C. That is according to tradition. I do not know whether it is true or not. But what I do know is that the Stone is
Scottish sandstone, and that it lay at Scone for about 700 years, until there was a quarrel between Bruce and Baliol, and Edward I, called "the Hammer of the Scots," was brought in to arbitrate betwixt the two. He came to Scotland as an arbitrator. He called in all the evidence, searched all the archives of Scotland, and took all these with him to England, along with the Stone, according to Professor Innes in his "Ancient Inhabitants of Scotland," which, if read, would do a number of people here a great deal of good. Edward I destroyed every monument of the antiquities of Scotland, and he took the Stone. I would ask hon. Members who claim to be Englishmen, and to put honour first, to weigh well now the statement, which is not mine, but is taken from Professor Tytler's "History of Scotland," in which he points that out conclusively. That is why we Scotsmen are so anxious to get that Stone back to Scotland, for Edward I considered, when he took the Stone from Scotland over the Border to Westminster, that he had taken Scottish independence with him.
The Stone was, and it is still, a symbol of our nationhood. It is a venerable relic, and Scotland has tried time and time again to get that venerable Stone returned to Scottish soil. Edward thought at that time, 1290, that he had completely conquered Scotland, that he had hammered the nationhood out of our country. He never did. I stand here to-day representing an unconquered race! Only a year elapsed when our great national hero Wallace arrived on the scene. He practically chased the. English out of our land.
After the Battle of Bannockburn, in 1314, when Robert the Bruce completely defeated the English, and they sued for peace, by a Treaty—this is where your honour will come in—by the Treaty of Northampton, in 1328, the Stone, with other relics, should have been restored to Scotland. The reason given for it not being returned, for the Treaty not being kept, was that the sentiment of London was against returning the Stone to Scotland. My friends and I are accused of being materialists. [HON. MEMBERS: "No!"] The charge is false. When we seek bread and shelter for our people, we also demand roses. The great spiritual, historical and sentimental bonds that bind together a race—these we cherish. The more material things of life are alone but as bread that turns to dust and ashes in
the mouth. They are the materialists who jeer and sneer at the demand of a nation for the ownership and custody of the symbol of its nationhood. I have much pleasure in moving the First Reading of my Bill.

Lord APSLEY: I do not wish to dispute directly with the hon. Gentleman who has just sat down in his reasoned and interesting account of the origin of the Stone of Destiny. He is, I believe, following the ecclesiastical and monastic tradition which states so much about the Stone. But if I may follow him a bit further than he went may I say that the Stone was brought by Kenneth McAlpine—

Mr. PRINGLE: No relation of the contractor!

Lord APSLEY: —from Dunstaffneys, where it had been presented to him by a legate of the Pope, as his reward for having converted Scotland to Christianity. [HON. MEMBERS: "Never!"] I would only say that it is dangerous, from the hon. Member's point of view, to follow that theory too closely, for surely, in that case, the Stone, if it be Jacob's Stone, ought to be returned to the place where it came from, Bethel, and to the Jews. As regards that interesting point which he raised, that the Stone was Scots red sandstone, I may say that. I have had to sleep many uncomfortable nights on the Hill of Bethel, and it is also red sandstone there. Fortunately for the hon. Member and his point of view, there are other traditions, and many of the most creditable chroniclers of the Middle Ages state clearly that the Stone was brought to Scotland by Fergus, the son of Eric, who came over with the Dalriads from Ireland and founded the Kingdom of Albain or Albania, which was afterwards called Scotia or Scotland. I may mention here that both Eric and Fergus are Scandinavian names, but that, as Kipling would say, is another story.
Both in Scotland and Ireland local tradition states, and states very strongly, that the Stone was in the possession of the Scots long before their conversion to Christianity, and the Pagan account of the origin of the Stone is that the god Odin, being vexed with another fellow deity who had been making eyes at his wife threw the Stone at his head, but fortunately for him it missed him, and
it fell among the Scots, who reverenced it ever after as a symbol of what might possibly happen to a mere mortal who might be guilty of a similar offence. Perhaps that is the reason why they used always to crown their Kings on it. It is a curious similarity with a Greek myth substituting Zeus for Odin. I only mentioned that in case it interests those who follow the legend that the Scots came with a colony, under Caledon, the son of Pyrrhus, King of Epirus, from the northern parts of Greece, which is now modern Albania. I believe there is red sandstone in Albania, too. I suggest that perhaps a committee of experts might inquire into this fact of the geological origin of the Stone and bear really valuable witness as to the origin of the race.
I will now come to more modern history. The hon. Member rightly states that Edward I took the Stone from Scotland, but only Whig historians who disregard facts to prove their theories would believe that Edward invaded Scotland merely for the fun of it and in order to become King of that country. The real facts show that Edward was compelled to undertake that expedition owing to the treaty concluded two years before by Baliol with France. The treaty, concluded on 23rd October, 1295, had borne fruit in several devastating raids made by the Scots over the English border. At that time there was no Reparation Commission and there was no League of Nations. There was only the Pope to appeal to, and it happened, when there was a really contentious matter on both sides, that his verdict was almost uni-

versally disregarded. In view of that, Edward took the Stone as the only tangible security for the reparations which he claimed, and I may claim that he proved wise in his generation, since at a later date, when James V. was released on promise of ransom by the Scots, the Scots never paid the ransom and have never paid it. That is the reason why the Stone has not yet beers returned. Finally, I oppose this Bill for reasons which hon. Members may, perhaps, regard as superstitious. If that be the case, I will plead that I have much Scots blood in my veins. In connection with this Stone, there is an old Latin couplet of which nobody knows the origin. I will not quote it to the House, although I have it here. [HON. MEMBERS: "Go on"]
Ni fallat fatum Scoti, quocunque locatum
Invenient lapidem, regnare tenentur ibidem."
That has been construed—
Unless the fates are faithless found,
And vision merely dream
Where'er this stone is on the ground
The Scots shall reign supreme.
I should hate to deprive this country and the Empire of the valuable services of the Scottish Minister and Scottish heads of Government Departments, and, for this reason alone, if for no other, I venture to oppose the Bill.

Question put,
That leave be given to bring in a Bill to provide for the removal of the Scottish Stone of Destiny from Westminster Abbey to Holyrood Palace, Edinburgh.

The House divided: Ayes, 201: Noes, 171.

Division No. 151.]
AYES.
[4.7. p.m.


Adamson, Rt. Hon. William
Chapple, Dr. William A.
Edwards, John H. (Accrington)


Adamson, W. M. (Staff., Cannock)
Charleton, H. C.
Emlyn-Jones, J. E. (Dorset, N.)


Alexander, A. V. (Sheffield, Hillsbro')
Clarke, A.
Falconer, J.


Alstead, R.
Climie, R.
Ferguson, H.


Astor, Viscountess
Cluse, W. S.
Foot, Isaac


Baird, Major Rt. Hon. Sir John L.
Clynes, Rt. Hon. John R.
Gardner, B. W. (West Ham, Upton)


Baker, Walter
Collins, Sir Godfrey (Greenock)
Gavan-Duffy, Thomas


Banton, G.
Cove, W. G.
Gosling, Harry


Barclay, R. Noton
Cowan, D. M. (Scottish Universities)
Gould, Frederick (Somerset, Frome)


Barnes, A.
Crittall, V. G.
Graham, D. M. (Lanark, Hamilton)


Barrie, Sir Charles Coupar (Banff)
Davies, David (Montgomery)
Graham, W. (Edinburgh, Central)


Batey, Joseph
Davies, Ellis (Denbigh, Denbigh)
Greenall, T.


Benn, Captain Wedgwood (Leith)
Davies, Rhys John (Westhoughton)
Greenwood, A (Nelson and Colne)


Bentinck, Lord Henry Cavendish
Davison, J. E. (Smethwick)
Grenfell, D. R. (Glamorgan)


Berry, Sir George
Dickson, T.
Griffiths, T. (Monmouth, Pontypool)


Bondfield, Margaret
Dodds, S. R.
Groves, T.


Broad, F. A.
Dudgeon, Major C. R.
Grundy, T. W.


Brown, A. E. (Warwick, Rugby)
Dukes, C.
Guest, J. (York, Hemsworth)


Brown, James (Ayr and Bute)
Dunnico, H.
Hacking, Captain Douglas H.


Buckle, J.
Ednam, Viscount
Hall, F. (York, W. R., Normanton)


Butler, Sir Geoffrey
Edwards, C. (Monmouth, Bedwellty)
Hall, G. H. (Merthyr Tydvil)


Cape, Thomas.
Edwards, G. (Norfolk, Southern)
Hamilton, Sir R. (Orkney & Shetland)


Harbord, Arthur
Maxton, James
Smith, T. (Pontefract)


Hardle, George D.
Middleton, G.
Snowden, Rt. Hon. Philip


Harney, E. A.
Millar, J. D.
Somerville, Daniel (Barrow-In-Furness)


Harris, John (Hackney, North)
Mills, J, E.
Spencer, George A. (Broxtowe)


Hartshorn, Rt. Hon. Vernon
Mitchell R. M.(Perth & Kinross, Perth)
Stephen, Campbell


Harvey, T. E. (Dewsbury)
Mitchell, Sir W. Lane (Streatham)
Stewart, J. (St. Rollox)


Hastings, Sir Patrick
Montague, Frederick
Stuart, Hon. J. (Moray and Nairn)


Haycock, A. W.
Morel, E. D.
Sturrock, J. Leng


Hayday, Arthur
Morrison, R. C. (Tottenham, N.)
Sueter, Rear-Admiral Murray Fraser


Hayes, John Henry
Muir, John W.
Sullivan, J.


Henderson, Rt. Hon. A. (Burnley)
Murray, Robert
Sutton, J. E.


Henderson, T. (Glasgow)
Naylor, T. E.
Thompson, Piers G. (Torquay)


Henderson, W. W.(Middlesex, Enfield)
Nichol, Robert
Thomson, F. C. (Aberdeen, South)


Hirst, G. H.
Nixon, H.
Thomson, Trevelyan (Middlesbro. W.)


Hobhouse, A. L.
O'Connor, Thomas P.
Thorne, G. R. (Wolverhampton, E.)


Hoffman, P. C.
O'Grady, Captain James
Thorne, W. (West Ham, Pialstow)


Hogge, James Myles
Oliver, George Harold
Tinker, John Joseph


Hore-Belisha, Major Leslie
Oliver, P. M. (Manchester, Blackley)
Tout, W. J.


Hudson, J. H.
Paling, W.
Turner-Samuels, M.


Hughes, Collingwood
Palmer, E. T.
Viant, S. P.


Isaacs, G. A.
Parkinson, John Allen (Wigan)
Vivian, H.


Jackson, R. F. (Ipswich)
Pattinson, S. (Horncastle)
Ward, Col. J. (Stoke-upon-Trent)


Jewson, Dorothea
Perry, S. F.
Warne, G. H.


John, William (Rhondda, West)
Pethick-Lawrence, F. W.
Watson, W. M. (Dunfermline)


Jones, Henry Haydn (Merloneth)
Phillipps, Vivian
Watts-Morgan, Lt.-Col. D. (Rhondda)


Jowett, Rt. Hon. F. W. (Bradford,E.)
Potts, John S.
Wedgwood, Col. Rt. Hon. Josiah C.


Lambert, Rt. Hon. George
Pringle, W. M. R.
Welsh, J. C.


Lansbury, George
Ramage, Captain Cecil Beresford
Westwood, J.


Laverack, F. J.
Remer, J. R.
Whiteley, W.


Lawrence, Susan (East Ham, North)
Rendall, A.
Wignall, James


Leach, W.
Richards, R.
Williams, Dr J. H. (Llanelly)


Lee, F.
Richardson, R. (Houghton-le-Spring)
Williams, Col. P. (Middlesbrough, E.)


Lessing, E.
Ritson, J.
Williams, Lt.-Col. T.S.B. (Kenningtn.)


Lindley, F. W.
Robertson, J. (Lanark, Bothwell)
Williams, T. (York, Don Valley)


Linfield, F. C.
Romeril, H. G.
Wilson, C. H. (Sheffield, Attercliffe)


Livingstone, A. M.
Rose, Frank H.
Wilson, R. J. (Jarrow)


Lorimer, H. D.
Royle, C.
Windsor, Walter


Lowth, T.
Rudkin, Lieut.-Colonel C. M. C.
Wintringham, Margaret


Lunn, William
Russell, Alexander West (Tynemouth)
Wood, Major Rt. Hon. Edward F. L.


McCrae, Sir George
Scurr, John
Woodwark, Lieut.-Colonel G. G.


Macdonald, Sir Murdoch (Inverness)
Sexton, James
Wright, W.


Mackinder, W.
Shaw, Rt. Hon. Thomas (Preston)
Young, Andrew (Glasgow, Partick)


Macpherson, Rt. Hon. James I.
Shinwell, Emanuel



Maden, H.
Short, Alfred (Wednesbury)
TELLERS FOR THE AYES.—


Marley, James
Simon, E. D. (Manchester, Withingtn.)
Mr. Kirkwood and Mr. T. Johnston.


Martin, W. H. (Dumbarton)
Sinclair, Major Sir A. (Caithness)



Masterman, Rt. Hon. C. F. G.
Smillie, Robert



NOES.


Acland, Rt. Hon. Francis Dyke
Chapman, Sir S.
Gwynne, Rupert S.


Amery, Rt. Hon. Leopold C. M. S.
Church, Major A. G.
Hannon, Patrick Joseph Henry


Ashley, Lt.-Col. Rt. Hon. Wilfrid W.
Churchman, Sir Arthur C.
Harmsworth, Hon. E. C. (Kent)


Astor, Maj. Hon. John J.(Kent, Dover)
Clayton, G. C.
Henn, Sir Sydney H.


Baldwin, Rt. Hon. Stanley
Conway, Sir W. Martin
Herbert Dennis (Hertford, Watford)


Balfour, George (Hampstead)
Cope, Major William
Herbert, Capt. Sidney (Scarborough)


Barker, G. (Monmouth, Abertillery)
Craig, Captain C. C. (Antrim, South)
Hindle, F.


Barnston, Major Sir Harry
Craik, Rt. Hon. Sir Henry
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.


Beamish, T. P. H.
Crooke, J. Smedley (Deritend)
Hogbin, Henry Cairns


Becker, Harry
Davies, Alfred Thomas (Lincoln)
Hood, Sir Joseph


Beckett, Sir Gervase
Davies, Maj. Geo. F. (Somerset, Yeovil)
Hope, Rt. Hon. J. F. (Sheffield, C)


Benn, Sir A. S. (Plymouth, Drake)
Davies, Sir Thomas (Cirencester)
Howard, Hon. D.(Cumberland, North)


Betterton, Henry B.
Davison, Sir W. H. (Kensington, S.)
Howard, Hon. G. (Bedford, Luton)


Birkett, W. N.
Dawson, Sir Philip
Howard-Bury, Lieut.-Col. C. K.


Black, J. W.
Doyle, Sir N. Grattan
Hume-Williams, Sir W. Ellis


Blundell, F. N.
Dunn, J. Freeman
Iliffe, Sir Edward M.


Bonwick, A.
Eden, Captain Anthony
Inskip, Sir Thomas Walker H.


Bourne, Robert Croft
Edmondson, Major A. J.
Jones, C. Sydney (Liverpool, W.Derby)


Bowater, Sir T. Vansittart
Elliot, Walter E.
Kay, Sir R. Newbald


Bowyer, Captain G. E. W.
Elveden, viscount
Keens, T.


Brass, Captain W.
England, Colonel A.
Kindersley. Major G. M.


Brassey, Sir Leonard
Eyres-Monsell, Com. Rt. Hon. B. M.
King, Captain Henry Douglas


Briant, Frank
Falle, Major Sir Bertram Godfray
Lamb, J. Q.


Bridgeman, Rt. Hon. William Clive
FitzRoy, Captain Rt. Hon. Edward A.
Lloyd-Greame, Rt. Hon. Sir Philip


Brittain, Sir Harry
Fletcher, Lieut.-Com. R. T. H.
Lowe, Sir Francis William


Brunner, Sir J.
Forestler-Walker, L.
Lumley, L. R.


Buckingham, Sir H.
Frece, Sir Walter de
McEntee, V. L.


Bullock, Captain M.
Gardner, J. P. (Hammersmith, North)
McLean, Major A.


Burman, J. S.
Gibbs, Col. Rt. Hon. George Abraham
Macnaghten, Han. Sir Malcolm


Cautley, Sir Henry S.
Gilmour, Colonel Rt. Hon. Sir John
McNeill, Rt. Hon. Ronald John


Cayzer, Sir C. (Chester, City)
Greene, W. P. Crawford
Maitland, Sir Arthur D. Steel


Cecil, Rt. Hon. Sir Evelyn (Aston)
Gretton, Colonel John
Makins, Brigadier-General E.


Chamberlain, Rt. Hn. J. A. (Birm. W.)
Guest, Dr. L. Haden (Southwark, N.)
Morse, W. E.


Chamberlain, Rt. Hon. N. (Ladywood)
Guinness, Lieut.-Col. Rt. Hon. W. E.
Moulton, Major Fletcher




Nall, Lieut.-Colonel Sir Joseph
Roberts, Samuel (Hereford, Hereford)
Turner, Ben


Newman, Sir R. H. S. D. L. (Exeter)
Roundell, Colonel R. F.
Turton, Edmund Russborough


Newton, Sir D. G. C. (Cambridge)
Samuel, A. M. (Surrey, Farnham)
Varley, Frank B.


Nicholson, O. (Westminster)
Sandeman, A. Stewart
Vaughan-Morgan, Col. K. P.


Nicholson, William G. (Petersfield)
Savery, S. S.
Waddington, R,


Nield, Rt. Hon. Sir Herbert
Seely, H. M. (Norfolk, Eastern)
Ward, Lt.-Col. A.L.(Kingston-on-Hull)


Oman, Sir Charles William C.
Shepperson, E. W.
Warrender, Sir Victor


O'Neill, Rt. Hon. Hugh
Sherwood, George Henry
Watson, Sir F. (Pudsey and Otley)


Ormsby-Gore, Hon. William
Simpson, J. Hope
Wells, S. R.


Owen, Major G.
Smith-Carington, Neville W.
Weston, John Wakefield


Pease, William Edwin
Spencer, H. H. (Bradford, S.)
Wheler, Lieut.-Cot. Granville C. H.


Pennefather, Sir John
Spender-Clay, Lieut.-Colonel H. H.
Williams, A. (York, W. R., Sowerby)


Percy, Lord Eustace (Hastings)
Spero, Dr. G. E.
Wilson, Sir C. H. (Leeds, Central)


Perring, William George
Stamford, T. W.
Windsor-Clive, Lieut.-Colonel George


Pielou, D. P.
Stanley, Lord
Wise, Sir Fredric


Pilditch, Sir Philip
Starmer, Sir Charles
Wood, Sir H. K. (Woolwich, West)


Pownall, Lieut.-Colonel Assheton
Steel, Samuel Strang
Worthington-Evans, Rt. Hon. Sir L.


Raine, W,
Sykes, Major-Gen. Sir Frederick H.
Wragg, Herbert


Rathbone, Hugh H.
Thompson, Luke (Sunderland)
Yate, Colonel Sir Charles Edward


Rawlinson, Rt. Hon. John Fredk. Peel
Thomson, Sir W. Mitchell-(Croydon,S.)
Yerburgh, Major Robert D. T.


Rawson, Alfred Cooper
Thornton, Maxwell R.



Rea, W. Russell
Thurtle, E.
TELLERS FOR THE NOES.—


Rees, Sir Beddoe
Titchfield, Major the Marquess of
Lord Apsley and Captain Viscount Curzon.


Remnant, Sir James
Tryon, Rt. Hon. George Clement



Rhys, Hon. C. A. U.




Question put, and agreed to.

Bill ordered to be brought in by Mr. Kirkwood, Mr. Thomas Johnston, Mr. Neil Maclean, Mr. Campbell Stephen, Mr. Nichol, Mr. Buchanan, Mr. Murray, Mr. Welsh, Mr. Dickson, Mr. Westwood, Mr. Duncan Graham, and Mr. Maxton.

SCOTTISH STONE OF DESTINY BILL,

"to provide for the removal of the Scottish Stone of Destiny from Westminster Abbey to Holyrood Palace, Edinburgh," presented accordingly, and read the. First time; to be read a Second time upon Monday next, and to be printed [Bill 208.]

IMPERIAL INSTITUTE BILL [Lords].

Read the First time; to be read a Second time To-morrow, and to be printed. [Bill 205.]

ESTIMATES.

Second Report from the Select Committee, with Minutes of Evidence, brought up, and read.

Report to lie upon the Table, and to be printed.

STANDING ORDERS.

Resolutions reported from the Select Committee,

1. "That in the case of the Londonderry and Lough Swilly Railway Bill [Lords], no Standing Orders are applicable."
224
2. "That, in the case of the North Metropolitan Electric Power Supply Company Bill [Lords], Petition for dispensing with Standing Order 123, in the case of the Petition of 'the, Middlesex County Council,' against the Bill, the Standing Order ought to be dispensed with."

MESSAGE FROM THE LORDS.

That they have agreed to—

Morecambe Corporation Bill,
London, Midland, and Scottish Railway Bill,
London and North Eastern Railway Bill,
Grampian Electricity Supply Bill, with Amendments.

That they have passed a Bill, intituled, "An Act to establish commissioners to maintain sea embankments and a land drainage system on certain lands in the county borough of Southport and in the parishes of North Meols, Scarisbrick, Tarleton, and Burscough, in the county of Lancaster; and to transfer certain lands and works to and to confer powers on such commissioners; and for other purposes." [Scarisbrick Estate Drainage Bill [Lords.]

SCARISBRICK ESTATE DRAINAGE BILL [Lords].

Read the First time; and referred to the Examiners of Petitions for Private Bills.

SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE D.

Mr. WILLIAM NICHOLSON reported from the Committee of Selection; That they had added the following Ten Members to Standing Committee D (in respect of the Lead Paint (Protection against Poisoning) Bill): Mr. Bridgeman, Major Burnie, Dr. Chapple, Mr. Compton, Mr. Rhys Davies, Mr. Edward Grenfell, Mr. Harney, Mr. Secretary Henderson, Major Kindersley, and Mr. D. G. Somerville.

Report to lie upon the Table.

Orders of the Day — FINANCE BILL.

As amended, considered.

NEW CLAUSE.—(Explanation of Income Tax deduction to be annexed to dividend warrants, etc.)

(1) Every warrant or cheque or other order drawn or made, or purporting to be drawn or made, after the thirtieth day of November, nineteen hundred and twenty-four, in payment of any dividend or interest distributed by any company, being a company within the meaning of the Companies (Consolidation) Act, 1908, or a company created by letters patent or by or in pursuance of an Act of Parliament, shall have annexed thereto or be accompanied by a statement in writing showing—

(a) the gross amount which, after deduction of the Income Tax appropriate thereto, corresponds to the net amount actually paid; and
(b) the rate and the amount of income Tax appropriate to such gross amount; and
(c) the net amount actually paid.

(2) If a company fails to comply with the provisions of this Section, the company shall in respect of each offence incur a penalty of ten pounds.

Provided that the aggregate amount of any penalties imposed under this Section on any company in respect of offences connected with any one distribution of dividends or interest shall not exceed one hundred pounds.—[Mr. Snowden.]

Brought up, and read the First time.

The CHANCELLOR of the EXCHEQUER (Mr. Snowden): I beg to move, "That the Clause be read a Second time."
This Clause provides that a company, with every warrant or cheque or other order drawn or made in payment of dividends or interest distributed by the company shall accompany it with a statement in writing showing the gross amount which, after deduction of Income Tax appropriate thereto, corresponds to the net amount actually paid and the rate and the amount of Income Tax appropriate to such gross amount; also the net amount actually paid. On the Committee stage of the Bill several hon. Members raised this question, and my hon. Friend the Financial Secretary promised that it should have consideration. This new Clause is the result of that consideration. It deals only with companies, and I hope that the Clause
now put forward will meet with the approval of hon. Gentlemen. If it should happen that after it has been put into operation it is found that other grievances exist, they, I promise, will be duly considered.

Mr. A. M. SAMUEL: I think the Chancellor of the Exchequer has met us very fairly, and I am much obliged to him for so doing. The Clause will do a great deal to remedy the grievances complained of. I note what the right hon. Gentleman says that if it is necessary, after finding how the Clause works, to deal with other points, he will bring in a proposal to meet the difficulty, and I thank him for that. May I make one or two suggestions? Does he not think it would be a good thing to have a common form on which dividend statements should be made? A common form was used in the Rent Restrictions Act, and I think there need be no difficulty about doing it in this case. I could draft a form in about twenty minutes which would help the companies a good deal and save a lot of trouble later on. Let us have a common form to apply to all companies. The other proposal I have to make—whether it should be enacted by law I do not say—but it is that the companies should be asked to state on their dividend statements for what period they pay. It is very difficult for an elderly person to know, when claiming back deductions, whether they shall be paid back at the rate in force when the claim was made, or whether they should be repaid at the rate during the time the earning of the dividend occurred. I understand the right hon. Gentleman to indicate that this Clause will give effect to my suggestion that the dividend statements should state for what period the dividend takes effect.

Sir KINGSLEY WOOD: I also would like to thank the right hon. Gentleman. He kindly granted me an interview on this matter, and I then ventured to suggest to him what might be done by way of amendment of the rule. Everyone will recognise that this new Clause is a convenient method of dealing with the question. If I may respectfully say so, I think the Chancellor of the Exchequer is wise in, at any rate, in the first instance, in limiting this to companies. It is more likely to be followed up in that way. The other suggestion would have brought
in all sorts of people and would have been very difficult to follow out in practice. I am glad the Chancellor of the Exchequer has put substantial penalties into the Clause, although I have no doubt that the majority of the companies up and down the country will immediately follow up the suggestion that has been made. It is a small matter, but I believe it will give assistance to a large number of people, and for that reason I thank the right hon. Gentleman for his concession.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Increase of amount of deduction under Sections 19 and 20 of Finance Act, 1920.)

The amount of the deduction to be allowed under Section nineteen of the Finance Act, 1920, as amended by this Act and under Section twenty of the Finance Act, 1920 (which Section provide respectively for deductions from assessable income in respect of relatives taking charge of widowers' and widows' children or acting as housekeepers, and for such deductions in respect of widowed mothers, etc.), shall be increased from forty-five pounds to sixty pounds.—[Mr. Snowden.]

Brought up, and read the First time.

Mr. SNOWDEN: I beg to move, "That the Clause be read a Second time."
It will be remembered that on the Committee stage of the Bill Amendments were put forward raising the amount of the allowance in the case of housekeepers, and especially in the case of a widow living with her son and acting in the capacity of housekeeper. The Clause was withdrawn in the Committee stage, on the understanding that consideration would be given to it before the Report stage was reached. I have gone further in the concessions I have now made more than was asked for in the Amendment discussed in Committee. The New Clause not only increases the amount in the case of a widow acting as housekeeper for her son but it also increases the allowance in the case of the general housekeeper. The House will remember that in Committee I extended the conditions of exemption. Under the previous Clause, it was limited to cases where there were children. That limit has been swept away in this amended Clause, and I now propose to raise the allowance for
both classes of housekeeper from £45 to £60. That, I think, is a fairly generous concession and one which will be appreciated by the people in whose interest it is granted.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Amendment of Rule 8 of NO. V. in Schedule A.)

Rule 8 of No. V in Schedule A shall have effect as if at the end of paragraph (2) thereof there were added the words "and additions or improvements to farmhouses, farm buildings, or cottages, but only if no increased rent is payable in respect of the additions or improvements and in so far as they are made in order to comply with the requirements of any Statute or the regulations or bye-laws of a local authority.—[Mr. Snowden.]

Brought up, and read the First time.

Mr. SNOWDEN: I beg to move, "That the Clause be read a Second time."
This Clause deals with the amendment of Rule 8 of No. V in Schedule A, which deals with claims in respect of repairs to farmhouses, etc. It gives practically everything asked for in the Amendment discussed on the Committee stage, although there was then on the Paper one Amendment which went rather further. This new Clause will allow relief from Income Tax for additions or improvements to farmhouses, farm buildings, or farm cottages, but only if no increased rent is payable in respect of the additions or improvements, and in so far as they are made in order to comply with the requirements of any Statute or the regulations or bye-laws of a local authority. I admit it was a real grievance that under the existing condition of things a landowner should be compelled to make certain improvements in his property on instructions or demand of the local sanitary authority, or by Act of Parliament, and that he should not be allowed to recoup himself by increasing the rent, or that he should not get relief from Income Tax in respect thereof. This new Clause will remove that grievance, and I hope it will be accepted.

Mr. BRIDGEMAN: I think the Chancellor of the Exchequer is anxious to meet the grievance which was raised in the previous discussions on the Finance Bill,
but I think he has rather missed a point in regard to this Amendment. The words,
and in so far as they are made in order to comply with the requirements of any Statute or the regulations or bye-laws of a local authority
limit the concession to those people who have thought it wise to make improvements which were required by Statute or bye-law, and if limited in that way this concession will be very little use to the rural districts. What happens is that you may have a bad cottage, or, at any rate, one which you want to improve. No Statute or bye-law will compel you to do it, but suppose you are anxious to rebuild it and make it more comfortable, and you do not want to charge any more rent to the occupier. If you leave these words in you cut out the man who wishes to do these improvements and give money back to the man who does it because he is obliged to do it, and you give no relief in the other case where it is done voluntarily.
It is quite right to make a limitation that you should not charge any more rent, and if the landlord does charge more it is right to say he must refund whatever payments have been allowed, but these words seem to me quite unnecessary, and they will discourage any body who is trying to improve his cottages of his own accord, and encourage those who are waiting until they are obliged to do the improvements. The Treasury gains if you put a good cottage in place or a bad one because the assessment is raised and the income tax is greater, but by refusing a man a legitimate reduction when he has tried to do his duty it seems to me that the Treasury are entirely blind to what is the right thing in dealing fairly with the man who is trying his best to improve housing in his district. It is most discouraging to find an attitude like this taken up by the Treasury which refuses relief to a man who is voluntarily trying to improve his property without putting anything into his own pocket. I hope the Chancellor of the Exchequer will agree to leave out the last two lines of this new Clause.

Mr. LEIF JONES: I do not think that this new Clause will be much help towards the improvement or rural cottages, and it evidently does not meet the cases brought before the right hon. Gentleman in the previous discussion which are common in
the rural districts. These houses are not let at a rack rent in the rural districts, but at the traditional rent of 1s. 6d., 2s. or 2s. 6d. per week. With a desire to improve those cottages the owner may add a bedroom, or a washhouse, or make other improvements. There is no suggestion of any raising of the rents, and to do justice all round that expenditure ought to have the relief which is given to expenditure under this Clause. It is rather difficult to distinguish between that expenditure and expenditure intended to end in a raising of the rent, but the distinction is a very real one, and the number of cases is quite large in the country districts. I wish the Chancellor of the Exchequer could draw that distinction by going a little further.

Lieut.-Colonel SPENDER-CLAY: I have handed in a manuscript Amendment to leave out all words after the word "improvements" in line 4 of this new Clause. I cannot help thinking that those words are practically useless for the purpose for which they are intended. I think a landowner trying to improve the condition of his farm should be able to make a claim for the maintenance allowance. I take it this depends now upon whether the regulations or the by-laws permit it. In every district there are different by-laws and regulations made by the local authorities. I think the Government are leaving this Rule in a great state of ambiguity. I do not know whether the Chancellor of the Exchequer has road the Rule as it will appear with this Amendment in it, and I think it is worth reading to the House. It will read as follows:
For the purpose of this Rule the term 'maintenance' shall include replacements to the farmhouse, farm buildings, cottages, fences, and other works where the replacement is necessary to maintain the existing rent"—
Then the words of the Amendment are added as follows:
and additions or improvements to farmhouses, farm buildings, or cottages, but only if no increased rent is payable in respect of the additions or improvements and in so far as they are made in order to comply with the requirements of any statute or the regulations or by-laws of a local authority.
Not only is this new Rule extremely clumsy, but it is liable to misconception, and I submit that it would be more in the spirit of what is required to encour-
age local rural improvements if the last three lines are left out. It seems to me that if a farmer wishes to have a bathroom put in his farmhouse, or if he wants a washhouse added to a rural cottage, if it is not laid down specially in the regulations of the local authority, the tax collector might say that these things are not laid down under the rules and regulations of the local authority, and that no claim for relief or maintenance claim can be made. Therefore, I contend that a case has been made out for leaving out those words, and in view of what has been said, I hope the Chancellor of the Exchequer will reconsider his decision, and agree to the deletion of these words.

Mr. NEVILLE CHAMBERLAIN: I would like to add my voice to the appeal which has been made to the Chancellor of the Exchequer to amend the new Clause as it is put down on the Paper, because I do not think in its present form it does carry out the undertaking which the right hon. Gentleman gave on the Committee stage. I am not accusing the right hon. Gentleman of wilfully going back upon his promise, but I think I am right in saying that the Clause dealing with this subject on the Committee stage was withdrawn on the right hon. Gentleman undertaking that he would himself draft a new Clause to effect the same purpose. The new Clause which was withdrawn was not in this form, but in an alternative form, that is to say, it dealt with "additions or improvements," and I think the words were "to comply with modern requirements," and then went on as an alternative "or if they are necessary in order to comply with the statute or with the bye-laws." I now have the Chancellor's exact words before me. Those words are impromptu words, and not a very definite pledge, but I think they convey what he intended at the time to do, that is, to carry out the objects which the Mover of the new Clause which was withdrawn had in view. The difference is that the Chancellor of the Exchequer by his proposed Clause is limiting the concession to those cases only where the additions for improvements are made necessary in order to comply with Parliamentary or local statutes or Regulations. There was no such limitation in the Clause as moved on the Committee stage,
and therefore as the Chancellor of the Exchequer admits that was the understanding in his own mind at the time, I think it would be fairer to go a little further than the Clause which the Chancellor of the Exchequer has now put forward.

Colonel GRETTON: Before the right hon. Gentleman replies, perhaps I might say that apparently there is some difficulty felt by the Treasury as to safeguarding improvements which increase the value, and ultimately increase the rent. Would it not be the fact that when the rent is increased in consequence of improvements the Chancellor of the Exchequer is aware of the fact that his assessors will be able to revise the assessments, and increase the amount of the Income Tax in accordance with the increased value shown by the increased rent obtained? It is clearly a little difficult to understand what is the essential difference of principle between the improvements which are made in the course of maintenance, because, presumably, these improvements would not be made unless they were intended to maintain the value and keep the tenant as the tenant. The improvement is not made without an increase of rent, and is that not a presumption? Cannot the right hon. Gentleman safeguard himself sufficiently by making the assessment higher in this case where an increased rent is charged?

Mr. G. SPENCER: I do not know how far the Chancellor of the Exchequer can go to meet the difficulty, but I am convinced that the actual working of this Clause will prove in the long run that its effect will be to retard any possible improvement that might take place. This Clause has been very unfortunate. In the first place, it is going to give an advantage to the landlord who is forced to do any improvements whatever. The landlord who has waited until he has received the statutory notice mo Regulations from the local authority axed complies is going to get the authority of this Clause, but the man who has willingly made improvements, not for the purpose of increased rent, but for the purpose of improving the amenities of the farmhouse or cottage, is going to get no such authority. What will that lead to in the future?
The landlord will know perfectly well that he is going to get no allowance for
this expenditure. Take the case of putting up a washhouse. Everyone knows, who goes about at all in rural districts, that there are numbers of cottages which could not possibly be built and maintained for the rent that is charged for them, and, although the landlord may be willing to put up a washhouse if he is going to get any advantage from this Clause, he will, if his property is getting into a dilapidated condition, wait until he gets a notice which forces him to do it, so that he may have the advantage of the Clause. It does seem to me that under this Clause the unwilling landlord would get an advantage, while the willing landlord would be discouraged from doing what he would like to do in order to improve the cottage or farm building. Therefore, I think that the request which has been made from the other side is a reasonable one, and, if the Chancellor can possibly accede to it, I hope he will do so.

Mr. ORMSBY-GORE: I am not sure that this Clause, as drafted, will not have a very detrimental effect on the working of the Rule without any Amendment, such as is proposed. As I read the words
in so far as they are made in order to comply with the requirements of any Statute or the regulations or bye-laws of a local authority,
they mean that it is only where the requirements of a Statute or the bye-laws of the local authority insist that certain conditions shall be complied with that relief can be given even to maintain the existing rent. That covers what has already been passed, and limits the con- cession that has already been granted. I think that that would be the correct legal view. Further, I read this Clause differently from my hon. and gallant Friend the Member for Tonbridge (Lieut.-Colonel Spender-Clay). If I understood him correctly, he read it as meaning that, if these requirements exist in a Statute or in a bye-law, then the concession will be made; but, as I read it, it will only be made if they are enforced by the local authority, and everyone knows that nothing is more common in rural England than the failure of rural district councils to enforce these bye-laws. I agree that it cuts both ways, because many of these bye-laws are obsolete and out of date, but I think the words
byelaws of a local authority
would be a limitation on the concession which would really render the concession quite valueless. I am not at all sure whether this Clause in actual practice would not be really more dangerous in the Bill than out of it, and, in view of that, I have two minds as to whether I should vote for the Second Reading of the Clause. I agree that the point is a difficult one, and one which should be very thoroughly investigated by the House before, on the Report stage of the Bill, we add a Clause drafted as this Clause is, and I do hope that the Financial Secretary to the Treasury will very thoroughly clear up the points, and will, if the Clause is read a Second time, see his way to accept such Amendments as will obviate the lamentable results which have been pointed out on both sides of the House, and which, I fear, will be even worse than has been foreshadowed by other Members who have spoken.

Captain BOWYER: I agree with what has been said by my hon. Friend the Member for Stafford (Mr. Ormsby-Gore). It seems clear that every one agrees with the proposed new Clause down to the word "improvements," but the Chancellor of the Exchequer seems to take up the attitude that he must have the remaining words of the Clause. May I suggest that he might please everyone and make the Rule as amended fit his purpose if, for the word "and" after "improvements," he would substitute either the word "or" or the words "and/or"? Then there would be two alternatives, either of which might enable the man who does the repairs to benefit under the new Clause. If the Chancellor of the Exchequer cannot see his way to accept the Amendment of my hon. and gallant Friend the Member for Tonbridge (Lieut.-Colonel Spender-Clay), would he consider this suggestion of mine?

Sir PHILIP PILDITCH: I do not know whether the Chancellor of the Exchequer appreciates to what extent these words go. The additions or improvements which will remain within the limits of the concession he has made are very limited. What are they? They are such additions or improvements as are made in order to comply with the requirements of any Statute or the regulations or bye-laws of a local authority. That means that they are limited absolutely to something in the nature of an offence, to something or
other that is wrong. They are, therefore, not additions or improvements at all, and the last words of the Clause are absolutely contrary to the preceding words, "additions or improvements." I suggest that it is not in the power of a local authority to require an addition or improvement, and I hope the Chancellor of the Exchequer will reconsider the last two lines of the Clause between now and another stage of the Bill.

The FINANCIAL SECRETARY to the TREASURY (Mr. William Graham): I readily respond to the suggestion which has been made that I should say a word or two in further explanation of this Clause, and I feel that I can best do so by reminding hon. Members briefly of the position regarding maintenance and repairs at the present time. As the House is aware, there is, under the existing legislation, an allowance in respect, of maintenance and repairs of one-eighth of the annual value of the property, and, over and above that—and this is important if these terms are widely interpreted—there is the provision that if taking a five years' average, the expenditure has exceeded one-eighth of the annual value, that allowance may be given to the proprietor of the rural or semi-rural cottage. That is the state of affairs at the present time regarding maintenance and repairs, and I venture to recall the facts to the House for the express purpose of drawing the very clear distinction which exists between these provisions in regard to maintenance and repairs and what is really a provision for capital expenditure, such as my right hon. Friend is now suggesting. That, after all, is the essential distinction.
There is not the least doubt that the Clause which my right hon. Friend has put on the Paper is a Clause making a certain allowance in respect of capital expenditure, because it specifically refers to additions to the farmhouse or other farm property. I need not remind hon. Members that that is a very important departure in Income Tax practice in this country, because the whole practice hitherto has been to rule out anything in the nature of an allowance for capital expenditure. It is perfectly plain that, with the best will in the world to do well by this Clause, we could only take
steps in that direction with very great care and hesitation, because, immediately we made a concession to one class, it would be pressed for by other classes, and in course of time the structure of Income Tax administration would be undermined. I feel sure that, if the House understand this aright, they will realise that there is no restriction of the kind that has been suggested. The hon. Member for Stafford (Mr. Ormsby-Gore) and other hon. Members have argued as if this were to be only available on a specific direction by the local authority to do certain things or comply with certain requirements in a Statute. That is not as we understand it. The broad fact is that these are very often—indeed, mostly—general regulations, and, according to the provision embodied in this Clause, it applies to all people, that is to say, to people generally who fall within the regulations or provisions of the local authority in that district. Accordingly, there would be no difficulty whatever in getting this allowance in respect of what I have called capital expenditure, and I imagine that the kind of problem which has been described by hon. Members could not arise.

Sir P. PILDITCH: May I point out that, while the Financial Secretary uses the word "regulations" the word in the Clause is "requirements," which is something altogether different?

Mr. GRAHAM: The word "requirements" is used in the sense of local regulations in the locality. I am perfectly satisfied that that difficulty cannot arise, but, in any event, may I point out that we are carrying out in this Clause exactly what is intended by the Clause standing later on the Paper, in the name of the hon. and valiant Member for Ashford (Major Steel) and other Members, in which are used the words
…. and the term 'replacement' shall include replacement according to an improved standard necessary to meet modern requirements, or to comply with any Act of Parliament or any regulation or bye-laws of a local authority.
[HON. MEMBERS: "The word is 'or'!"] The whole point that I am making at the moment is that the hon. Members in whose name that Clause stands have in view the requirements of the local authority. Our information is that there is no danger of a difficulty of this kind, but, quite frankly, my right hon. Friend
feels that he could not go beyond this provision in regard to what is a matter of capital expenditure, and I beg the House to keep that very clearly in view. We are satisfied that there will be no restriction in practice, and, if the Clause were widened as suggested, it would open the door to a large class of capital expenditure which in Income Tax practice could not be justified at all.

Mr. N. CHAMBERLAIN: Do I understand the hon. Gentleman to make a distinction between the requirements of a Statute and the requirements of a local authority? If that be so, would he consider substituting for the word "requirements" the word "terms," which would only apply to the one and not to the other?

Lieut.-Colonel SPENDER-CLAY: Do I understand the hon. Gentleman to say that, if the landowner desires to put a bath-room into his farm house, because the majority, at any rate, of the new houses that are now being erected are fitted with bath-rooms in rural districts, and especially in urban districts, that fact, that he is putting in a bath-room in accordance with modern requirements, would enable him to obtain a return of Income Tax in respect of maintenance?

5.0 P.M.

Mr. GRAHAM: If I may, by leave of the House, add a word, I should not like to reply to that point off-hand. It is rather difficult to make statements which are interpreted outside, applying to a large number of people, but, on the suggestion of the right hon. Member for Lady-wood (Mr. N. Chamberlain), I see no objection to the acceptance of the words "terms," or perhaps the word "provisions" would be a better word.

Mr. J. HOPE: There is one important matter to which the Financial Secretary to the Treasury has not replied. My hon. Friend the Member for Stafford (Mr. Ormsby-Gore) suggested that the addition, of these words would have a limiting effect on the present Rule, and would, in fact, take away concessions that had been made already. I think, before going further, that point ought to be cleared up. I do not know whether the learned Attorney-General has given his attention to it, but I think the point ought not, to be left in doubt.

Mr. GRAHAM: There is no doubt on that point. It would not have the limiting effect suggested, and I was endeavouring to make it clear in dealing with the capital expenditure, and the ordinary arrangements for maintenance and repairs.

Clause read a Second time.

Lieut.-Colonel SPENDER-CLAY: I beg to move, as an Amendment to the proposed new Clause, in line 4, to leave out the words
and in so far as they are finale in order to comply with the requirements, of any Statute or the regulations or bye-laws of a local authority.

Major the Marquess of TITCHFIELD: I beg to second the Amendment.

Mr. SPEAKER: In order to keep the way open for the other suggestion which has just been made, to change the word "requirements," I will put the Question down to that word.

Sir LAMING WORTHINGTON-EVANS: Would you, Mr. Speaker, put the Question down to the word "made," as I wish to move to leave out the words "in order to comply"?

Mr. SPEAKER: The Question I have to put is "That the words proposed to be left out, to the word 'in' ['so far as they are made in'], stand part of the Clause."

Lieut. - Colonel SPENDER - CLAY: I have already given reasons why I think it is important that this Rule should be amended. I agree with the hon. Member for Stafford (Mr. Ormsby-Gore) that the effect of this new Rule is absolutely to take away the concession previously granted. I think it would be an advantage to the House if we could have some response from the learned Attorney-General as to what the Rule, as amended, really means, because I think that there is a distinct danger that, instead of gaining, we are actually losing.

The ATTORNEY - GENERAL (Sir Patrick Hastings): I really do not think there need be any fear of the kind suggested. I understand that that fear was really based upon the reading of the word "requirements," as meaning requirements which were started by proceedings.
The word never really meant that, and now it is proposed to put the word "provisions" in its place. My view was always that you should read the word "requirements" in the same way as "provisions." There was something to be said for the fear as long as any hon. Member had in his mind the danger of the word "requirements," but now, that the word "requirements" is to be changed to "provisions," I have not the slightest hesitation in saying that there is not the least danger as suggested.

Sir L. WORTHINGTON - EVANS: Would the hon. and learned Gentleman accept, instead of the words "in order to comply," the words "consistently with the provisions of any Statute"? We want to encourage the landlord who goes actually ahead of legal obligations, and does what he believes to be his moral duty, but if you limit it in the words as they appear on the Paper, they do seem to impose some law of compulsion. As the Attorney-General said, by altering the word "requirements" into "provisions," it takes away part of that. It seems to roe my suggestion would remove the whole trouble.

The ATTORNEY-GENERAL: May I answer that, not from the point of view of policy, but merely from the point of view of the effect of the words? I think the words suggested would lead to the gravest doubt as to what is meant. The words "in order to comply with the provisions" mean that where the provisions of any statute or the regulations say that there shall be bathrooms, or various forms of improvements, it has nothing to do with legal proceedings. It merely means to say that a person carries out of his own motion that which the by-law says shall be carried out. To put in the other words suggested, I think, would lead to very grave doubt as to what they do mean.

Mr. BRIDGEMAN: The Financial Secretary to the Treasury said the Chancellor of the Exchequer could not agree to any further concession with regard to capital expenditure, but it is a concession to capital expenditure, if you apply it merely to people who make their improvements, because they are told to do so by the local authority. If you can make that concession to people who do it under com-
pulsion, cannot you make it to people who do it of their own free and, possibly, go beyond the bare requirements of the local authorities?

Mr. SNOWDEN: I think the right hon. Gentleman did not appreciate the observations of the Attorney-General, because the man who does things that are within the provisions of any Statute or within the regulations cannot be said to do them of his own free will.

Mr. BRIDGEMAN: The one case is that of a man who makes the least improvements he can before he gets the Order, and the other case is that of a man who makes the most generous improvements, going beyond the minimum requirements of the local authority. If the right hon. Gentleman means that a man who goes considerably beyond the bare requirements of the local authority will get the relief, that is a very different matter.

Mr. G. SPENCER: May I ask my right hon. Friend to make this point clear? There is not the least doubt that the Financial Secretary led us to believe that if it was a capital expenditure, notwithstanding the fact that it did comply with the Order, it would be allowed. Now he says that, if it complies with certain regulations, it will be allowed.

Sir P. PILDITCH: May I suggest there will be no need to add words if certain words are omitted? The hon. Gentleman does not want to confine these allowances to cases where the local authority is taking action against a recalcitrant landlord, and, therefore, I suggest he can make these words fit by simply leaving out the words "are made in order to." I suggest that would meet the situation as described by the Chancellor of the Exchequer and the Attorney-General.

Mr. ORMSBY-GORE: I am not at all satisfied either by the Attorney-General or by the Financial Secretary. It seems to me vital in the discussion to have the Rule before us, because this is adding words containing a limitation of an existing Rule. The existing Rule is a definition of the word "maintenance." That is where I think the Financial Secretary is wrong. All his fears about large concessions being made to capital expenditure are ruled out, because the
whole Rule applies to maintenance. Let me read the Rule:
For the purpose of this Rule, the term 'maintenance' shall include the replacement of farmhouses, farm buildings, cottages, fences and other works where the replacement is necessary to maintain the existing rent.
All these words deal with maintenance. On the top of that, you are adding, without comment, and without any stop, words ending with
and in so far as they are made in order to comply with the provisions of any Statute or the regulations or bye-laws of a local authority.
It seems to me it is quite definitely a limitation of the definition of the word "maintenance" in the old Rule, and I am not satisfied that the Inland Revenue authorities would not so read it. I think the words are absolutely fatal to the smooth and effective working of the concession that was granted.

The ATTORNEY-GENERAL: I had not the Rule before me when I spoke last, though I had it in my mind. I have it before me now, and I think the hon. Gentleman will see that his fear is one which he really need not anticipate. This is how it would read:
For the purpose of this Rule, the term 'maintenance' shall include replacement of farmhouses"—
and so on, where the replacement is necessary. So that the term "maintenance" includes the replacement of the building add "additions or improvements." The limitation is only in regard to "the additions or improvements in so far as they are made," and so on. The latter words only regulate the additions or improvements. They do not affect maintenance at all. The maintenance stands by itself.

Mr. D. HERBERT: Will the hon. and learned Gentleman consider this point? I think my hon. Friend was wrong, perhaps, in referring to maintenance. The point is that the rule as it stands deals with replacement.

Mr. SPEAKER: The House is in some little difficulty. May I ask whether these words will not meet the point, "and shall also include additions or improvements."

The ATTORNEY-GENERAL: That would make abundantly clear what I think is the position already. I am sure the Chancellor will have no objection to those words.

Lieut.-Colonel SPENDER-CLAY: On that understanding, I am willing to withdraw my Amendment.

Amendment, by leave, withdrawn.

Mr. N. CHAMBERLAIN: I wanted to make a suggestion about the withdrawal.

Mr. SPEAKER: It has been withdrawn.

Mr. CHAMBERLAIN: My suggestion would have included withdrawal.

Amendment made to proposed new Clause: In line 2, after the word "and" insert the words
shall also include."—[Mr. Snowden.]

Mr. CHAMBERLAIN: I was going to ask my hon. Friend to move his Amendment. I think that is a valuable suggestion, which meets the difficulty on this side without changing the sense the Attorney-General attaches to the words now on the Paper.

Sir P. PILDITCH: I beg to move, as an Amendment to the proposed New Clause, in line 5, to leave out the words "are made in order to."
This would distinctly allow the concession to extend over the very sort of case the Chancellor of the Exchequer and the Attorney-General wished. It will be possible for this concession to be asked for in case of additions or improvements which comply with the provisions of any Statute or the regulations or by-laws of a local authority and it would not confine it to cases where die local authority has taken action against the landlord.

The ATTORNEY-GENERAL: I am afraid that Amendment would be extremely dangerous and I certainly cannot allow my right hon. Friend to accept it. If you leave out these words the landlord may do the very thing the Chancellor of the Exchequer does not desire him to do. He may expend money on the house not in order to comply with regulations or Statutory requirements, and having done the work he desires to do he could apply for exemption, and when the Inland Revenue objected he would say, "What I have done complies with the regulations. I have put in a lot of things and they all comply with the regulations." The result would be that everyone could always come with any work he had done and say, "It complies with the regulations." The whole
purpose of these words, as I understand them, is that this provision shall only apply in the case of improvements which are bound to bring the cottages up to the requirements of the local authority or Statute, and the words "in order to comply with" make that quite clear. If you take them away the greatest danger would result.

Mr. S. ROBERTS: I want to put to the Government one concrete question with regard to certain by-laws which are very well known in many parts of the country. They are by-laws which deal with new houses. The bedrooms have to be of a certain cubic space, there has to be so much space between the floor and the ceiling, and the windows are to be in a certain position with regard to ventilation. They do not apply to existing houses. Under this Clause if a landlord, in repairing his cottage, takes off the roof and raises the height of the bedroom, would he be able to say that complies with the requirements for a new house. The local authority could not make him comply with these, but if the landlord comes along in order to improve his property and complies with the by-laws affecting new houses would he be able to get the exemption?

Mr. L. JONES: I want to put a similar question on a practical point. Where a wash-house is added to a cottage it is new capital expenditure. The rent is not raised, and there is no requirement in the by-laws. It is of great advantage to the cottage. Will that expenditure be allowed?

Mr. SNOWDEN: It would be rather an audacious thing to give a definite reply to a hypothetical question. The cases put are very largely of a legal character. If I were to express my own opinion, I should say neither case would come within the provisions of this Clause, because they would Loth be distinctly of the nature of capital expenditure.

Lieut.-Commander BURNEY: What my hon. Friend has suggested is this. Even in cases where no increase of rent is to be allowed and the landlord cannot benefit in any way he cannot improve the property and bring it up to modern requirements without having at the same time to pay Income Tax on the very
necessary expenditure which he makes. My hon. Friend put a case in which the landlord was trying to bring his property up to the modern standard and the Chancellor of the Exchequer gives it admittedly as his own personal opinion that in that case, with the words that are now inserted, the landlord will not be able to obtain a reduction on his Income Tax for that expenditure. Surely that hits at the whole object of the Clause and the whole object of the right hon. Gentleman's concession. There are throughout the country an enormous number of properties, farm buildings, cottages, and so forth, which have at some time or other to be brought up to modern requirements, and it seems to me that the concession made with one hand is now being taken away with the other. So far as this point is concerned in regard to the Treasury being mulct in a very large amount by persons making great capital expenditure, not really for the purpose of improving the property from the point of view of the tenants, but improving it so that at a later stage they can obtain increased rent, I suggest that the right hon. Gentleman is entirely covered already in the Clause, because if, at a later date, the rent is increased by virtue of these additions, it is open to the Income Tax Commissioners to go to the landlord and say, "You only obtained this concession because you were not going to increase the rent. We have given you this concession and you have made these improvements, and you have increased your rent and you must pay us the hack money you owe." In that case the Chancellor is entirely covered. I suggest that the Amendment should be pressed to a Division because it raises a very important point to fill the rural districts in the country and without it a willing landlord will be discouraged from improving his property and bringing it up to the modern standard of requirements.

Mr. BRIDGEMAN: May I ask the Chancellor of the Exchequer to consider one other point? When we discussed the Clause I pointed out that the house would be assessed at a considerably higher value after these improvements had been made, and therefore, even if the Treasury made the concession that you should deduct as an allowance the capital expenditure you had made in making
this improvement, they would still be gaining annually on the Income Tax because the assessment of the house would have been raised. What they are doing now is to say, "We are going to mulct you in Income Tax by raising your assessment although you may not be getting any more rent, and we are also going to refuse you any concession which other people, who have not done nearly such useful improvements as you, are going to get."

Sir P. PILDITCH: I quite realise that the Chancellor thinks he has made a considerable concession. I do not want to appear ungrateful, but it is difficult to reconcile the last speech of the Attorney-General with either his previous speech or with the Chancellor's speech. If they really mean not to confine this to cases where the local authority are requiring the owner of a cottage or a farm to do certain things, which, as I understood it, was the speech of the Attorney-General and of the Chancellor of the Exchequer, I suggest that they must leave out these words. What do they mean if they a-re left in? I am unfortunately not a lawyer and the Chancellor of the Exchequer is not a lawyer, but they must mean something in the nature of a requirement issued by the local authority requiring something to be done. If they do not meet us on this point the whole value of the concession which I am sure the Chancellor wants to give would be gone, and I feel very much disposed to ask the House to divide.

Mr. D. HERBERT: I quite see the Attorney-General's point, and I think he is perfectly right. When you have the words "in order to comply with" it means that you must not do more than comply. The Attorney-General suggested that, if you leave out the words, a man might build a Buckingham Palace and so comply with the Regulations regarding houses for the working classes. But that only shows the difficulty we are in and the lack of any real necessity on the Chancellor's part for including these words at the end of the Clause, because, taking that simile, it is certain that no landowner is going to build a Buckingham Palace by way of improvement. The whole point is, that he must not get any extra rent. That prohibition of getting any additional rent will give the right hon. Gentleman all the protection he
requires. On the other hand, there is this very serious objection, that if you are going to have this qualification at the end, you may not only be giving no benefit, or very little benefit, but you may be bringing about an even worse state of affairs, because you encourage people to let things go until they get to the very worst in order to make quite certain that they will get the benefit of this provision.

Major MOULTON: It is against the principles of our law that a man should be required to criminate himself, but as far as I can see the only ground on which a landlord can appeal to the Inland Revenue with regard to this expenditure is on the ground that "before I spent the money I was breaking the law by keeping the house in such a condition that it was not complying with the Statute." Statutes only fix a minimum standard; we want something better than that. The real difficulty is that the Chancellor will not accept the word "reasonably." If the question is whether the landlord has reasonably complied with the improved standard required by the modern conditions, the Inland Revenue can interpret it and can interpret it fairly. If you are going to refuse to allow any question of fact of that kind to be considered, I think you wilt have the greatest difficulty in getting any form of words which will encourage the decent landlord, which is what I think the House wants.

Sir L. WORTHINGTON-EVANS: Will the Chancellor of the Exchequer tell us what concession he thinks he is making if he refuses this Amendment? As I understand it, he says that in regard to old houses if a landlord tries to improve an old house by adding a bathroom or a wash house, or putting in windows, that as these are not done in order to comply with regulations relating to old houses and are only in accordance with regulations relating to new houses, the landlord is not to be allowed deductions in respect of that expenditure. Seeing that the whole object of this series of Amendments is that we may improve existing housing, it seems to me that the right hon. Gentleman is making no concession at all. If, on the other hand, he can see his way to accept this Amendment, that is, provided that the alteration is in accordance with the regulations relating
to new houses, bringing the old houses up to date, then he is making a concession, but not otherwise.

Mr. SNOWDEN: In his concluding observation, the right hon. Gentleman has crystallised the whole matter. Hon. Members opposite, supported by a few hon. Members sitting on this side, want to include for allowances capital expenditure employed in the rebuilding and modernising of a cottage.

Mr. D. HERBERT: Without extra rent.

Mr. SNOWDEN: Let us see what that really amounts to. There may be no increase of rent in the first year or during the period in which that particular landlord is the owner, but what guarantee is there that he is not going to sell that house and that he is going to get the actual value of the expenditure that he has incurred and the man who buys the house then charges an increased rent?

Lord H. CAVENDISH-BENTINCK: The cottage is improved, anyhow.

Mr. SNOWDEN: At the expense of the Inland Revenue. [HON. MEMBERS: "No!"] Undoubtedly. Hon. Members have forgotten the existing allowances that are made. The existing allowances are quite sufficient to meet such expenditure as putting in new windows, mentioned by the right hon. Member for Colchester, in place of old windows. The right hon. Gentleman asks me what my Amendment will do. Suppose a local authority required the water supply to be improved. That would be covered. Suppose the local authority insisted upon the drainage being improved. That would be covered. Suppose they insisted upon new sanitation so as to make the property come up to the requirements of the local authority. That would be covered. Any large expenditure of that kind would come within the terms of my Amendment.

Major STEEL: The landlord will not recover if he does such improvements as the provision of a better water supply, without its being insisted upon by the local authority?

Mr. SNOWDEN: I thought we had come to an agreement upon that point. It is not necessary in order to claim the
benefit of this Clause that the improvement should be done in compliance with an order issued by the local authority. I think the Attorney-General made that point clear.

Sir L. WORTHINGTON-EVANS: I do not dispute the Attorney-General's ruling. The sort of condition which the Chancellor of the Exchequer has been considering is where a local authority makes a drainage order, or some such order, applying to old houses. If the same sort of works were carried out on the 1st January, and the order applying to old houses was not made until the 1st June, the man who carried out the work on the 1st January would not he allowed a deduction, but if he did it on the 2nd July, under compulsion from the local authority, he would come within the Regulations applying to old houses. We want to bring the old houses no to the standard of the new.

The ATTORNEY-GENERAL: The hon. Member who moved the Amendment said that if my view was right and was adopted by the Chancellor of the Exchequer, that what we intended to cover were cases where work was done in compliance with Regulations, without waiting for orders, we might accept these words. The answer to that comes from what has been said by the right hon. Member for Colchester (Sir L. Worthington-Evans), because he hopes to get some sort of an Amendment which will give the right to bring old cottages up to the requirements of new cottages, which is far beyond anything which I suggested, and far beyond what my hon. Friend intended by his Amendment. The right hon. Member for Colchester wants much more than that, and it is because of that that we cannot accept the Amendment. The reason why my right hon. Friend cannot accept the Amendment is because he sees the danger that if he does accept it, the view of the right hon. Member for Colchester will prevail, and that will he doing more than my right hon. Friend intends. All that we intend is to put in a provision that any landlord who, without waiting for compulsion of any kind, carries out requirements which are thought by the local authority to be desirable and right for houses of that sort and of the age and condition which they then are, should get the allowance. [Interruption.] Take an
ordinary case of a street in a village, and the local authority says, "These houses are insanitary"—

Major STEEL: This Amendment does not apply to houses in streets in villages. Will the Attorney-General explain how this is going to help what we have in view, and that is, the improvement of farm houses or farm cottages?

The ATTORNEY-GENERAL: Let me take, then, farm houses and farm cottages. The local authority says: "All these cottages are insanitary. They will have to be modernised in the sense that the sanitation has to be improved, and wash-houses and bathrooms must be provided." Under the present law the landlord would have to do it and he would get nothing allowed for the purpose of Income Tax. [HON. MEMBERS: "That is not so!"] That is so. The reason why we cannot accept the Amendment is because we think it is dangerous and goes far beyond what we are prepared to concede.

Sir P. PILDITCH: Will the Attorney-General explain what is the concession that is being made and how he will give effect to it? I wish to confine my Amendment to what I said when I moved it. I do not follow whether that is in conflict with what hag been said by the right hon. Member for Colchester. If the Attorney-General has any suggestion to make that would meet the point I have raised, I should be glad to hear it. I am certain that if these five words are left in, that the point will not be met, whether the point raised by the right hon. Member for Colchester is met or not.

The ATTORNEY-GENERAL: Whether I be right or wrong, I am satisfied that the words as they now stand carry out what my hon. Friend desires. Perhaps the right hon. and learned Member for Central Bristol (Sir T. Inskip) will contradict me if he thinks I am wrong. My point is that the words
in order to comply with the provisions of any Statute or regulations
are not limited to cases where there has been an order, or any compulsion, but include the case of a landlord who voluntarily does without any order that which is necessary in order to bring the house up to the requirements of the regulation or standard. That is what my hon. Friend desires to see brought about, and
I can assure him that the words as they now stand do that.

Sir T. INSKIP: The Attorney-General has appealed to me on a matter of technical construction. I agree with the statement that the inclusion of the words "and in order to comply with the provisions of a Statute" have a different effect from the words "and comply with the provisions of a Statute." But what I think, with all due respect, the Attorney-General has missed is that when he speaks of the case of a man anticipating the requirements or the provisions of the Statute with regard to any existing buildings, the local authority has no power to make any requirements with regard to those buildings so as to kiting them up to the standard which is laid down for new buildings. The Attorney-General imagined a case of the requirements of a local authority which might require a new wash-house or a bathroom to be put into an existing building, but no local authority has any such power, and I do not suppose that any Act of Parliament which this House is likely to pass will enable a local authority to do any such thing. They may close the House but they cannot compel a man to spend money. Therefore, the principle is being made that this Clause as drawn is that, inasmuch as it only applies to provisions, which a local authority has power to make, it really gives nothing to the landlord who desires some relief, because the cases which the learned Attorney-General has imagined are cases which cannot exist under the existing state of the law.

The ATTORNEY-GENERAL: I am sure that everyone wishes to arrive at a proper conclusion as to what this really means. It is quite true that a local authority cannot say, "You shall put in a bathroom," but a local authority may make requirements, and in the case of a house being insanitary the local authority has power to close it and the local authority has also power to say what houses are insanitary. This covers all requirements. There are full powers under which a local authority can say that a house is insanitary. If a house is insanitary and a large amount of money has to be spent on doing certain things, and these things are not done, the local authority has power to say that the house must be closed.

Mr. N. CHAMBERLAIN: Is there any power under any by-law which enables a local authority to make a man put in a bathroom?

The ATTORNEY-GENERAL: It is true in general terms that there is not. The only reason why I said "wash-house" was that that word has been used. I was only dealing with a point made by my right hon. Friend that the local authority has no power to make a person do something, but the local authority has full power to say that if a house is not put into a certain condition it may be regarded as insanitary.

Mr. HOPE: I should be very sorry if this controversy were to be continued, and I would make a suggestion. The Chancellor of the Exchequer is very rightly solicitous about the increase the revenue. But in the case quoted, of a man who makes a large capital expenditure, and sells a house, the Chancellor of the Exchequer has the Stamp Duty, and when an increased rent is finally obtained.

the Income Tax assessment is likewise increased. However, I pass from that. What is not met is the case of the landowner who, without any order from the local authority, does something which is really necessary to have the house brought up to a proper standard, and whatever may happen under this Amendment I would suggest the omission of the words
or the regulations or by-laws of a local authority
at the end of the Clause, and the addition, instead of the words omitted, of the words
are certified by the Meal authorities as necessary for modern needs
I would suggest that the Chancellor of the Exchequer should consider this between now and the time when we arrive at these words.

Question put, "That the words proposed to be left our stand part of the proposed Clause, as amended."

The House divided: Ayes, 234; Noes, 167.

Division No. 152.]
AYES.
[5.52 p.m.


Acland, Rt. Hon. Francis Dyke
Dickson, T.
Henderson, T. (Glasgow)


Adamson, Rt. Hon. William
Dukes, C.
Henderson, W. W.(Middlesex,Enfield)


Adamson, W. M. (Staff., Cannock)
Duncan, C.
Hirst, G. H.


Alexander, A. V. (Sheffield, Hillsbro')
Dunn, J. Freeman
Hore-Belisha, Major Leslie


Allen, R. Wilberforce (Leicester, S.)
Dunnico, H.
Hudson. J. H.


Ammon, Charles George
Edwards, C. (Monmouth, Bedwellty)
Isaacs, G. A.


Aske, Sir Robert William
Edwards, G. (Norfolk, Southern)
Jackson, R. F. (Ipswich)


Attlee, Major Clement R.
Edwards, John M. (Accrington)
Jewson, Dorothea


Baker, Walter
Egan, W. H.
John, William (Rhondda, West)


Banton. G.
Emlyn-Jones, J. E. (Dorset, N.)
Johnston, Thomas (Stirling)


Barclay, R. Noton
Falconer, J.
Jones, C. Sydney (Liverpool,W.Derby)


Barker, G. (Monmouth, Abertillery)
Foot, Isaac
Jones, Henry Haydn (Merioneth)


Barnes, A.
Franklin, L. B.
Jones, Rt Hon. Lelf (Camborne)


Barrie, Sir Charles Coupar (Banff)
Gardner, B. W. (West Ham, Upton)
Jowett, Rt. Hon. F. W. (Bradford,E.)


Batey, Joseph
Gardner, J. P. (Hammersmith, North)
Keens, T.


Benn, Captain Wedgwood (Leith)
Gavan-Duffy, Thomas
Kenworthy, Lt.-Com. Hon. Joseph M.


Birkett, W. N.
Cibbins, Joseph
Kirkwood, D.


Black, J. W.
Gillett, George M.
Lansbury, George


Bondfield, Margaret
Gosling, Harry
Laverack, F J.


Bonwick, A.
Gould, Frederick (Somerset, Frome)
Law, A.


Bowerman, Rt. Hon. Charles W.
Graham, D. M. (Lanark, Hamilton)
Lawrence, Susan (East Ham, North)


Bramsdon, Sir Thomas
Graham, W. (Edinburgh, Central)
Lawson, John James


Briant, Frank
Greenall, T.
Leach, W.


Broad, F. A.
Greenwood, A. (Nelson and Colne)
Lee, F.


Bromfield, William
Grenfell. D. R. (Glamorgan)
Lessing, E.


Brown, A. E. (Warwick, Rugby)
Griffiths, T. (Monmouth, Pontypool)
Livingstone, A. M.


Brown, James (Ayr and Bute)
Groves, T.
Lowth, T.


Buckle, J.
Grundy. T. W.
Lunn, William


Buxton, Rt. Hon. Noel
Guest, J. (York, Hemsworth)
McCrae, Sir George


Cape, Thomas
Guest, Dr. L. Haden (Southwark, N.)
MacDonald, Rt. Hon. J.R.(Aberavon)


Chapple, Dr. William A.
Hall, G. H. (Merthyr Tydvil)
McEntee, V. L.


Charleton, H. C.
Hamilton, Sir R. (Orkney & Shetland)
Mackinder, W.


Church, Major A. G.
Harbord, Arthur
Maclean, Nell (Glasgow, Govan)


Clarke, A.
Hardle, George D.
Macnamara, Rt. Hon. Dr. T, J.


Climie, R.
Harris, John (Hackney, North)
Macpherson, Rt. Hon. James I.


Clynes, Rt. Hon. John R.
Harvey, T. E. (Dewsbury)
Maden, H.


Collins, Sir Godfrey (Greenock)
Hastings, Sir Patrick
March, S.


Compton, Joseph
Hastings, Somerville (Reading)
Marks, Sir George Croydon


Cove, W. G.
Haycock, A. W.
Marley, James


Cowan, D. M. (Scottish Universities)
Hayday, Arthur
Martin, W. H. (Dumbarton)


Crittall, V. G.
Hayes, John Henry
Masterman, Rt. Hon. C. F. G.


Darbishire, C. W.
Hemmerde. E. G.
Maxton, James


Davies, Rhys John (Westhoughton)
Henderson, Rt. Hon. A. (Burnley)
Meyler, Lieut.-Colonel H. M.


Davison, J. E. (Smethwick)
Henderson, A. (Cardiff, South)
Middleton, G.



Mitchell, R. M.(Perth & Kinross,Perth)
Scurr, John
Tillett, Benjamin


Montague, Frederick
Seely, H. M. (Norfolk, Eastern)
Tinker, John Joseph


Morel, E. D.
Sexton, James
Toole, J.


Morrison, R. C. (Tottenham, N.)
Shaw, Rt. Hon. Thomas (Preston)
Tout, W. J.


Morse, W. E.
Sherwood, George Henry
Trevelyan, Rt. Hon. C. P.


Muir, Ramsay (Rochdale)
Shinwell, Emanuel
Turner, Ben


Murray, Robert
Short, Alfred (Wednesbury)
Turner-Samuels, M.


Naylor, T. E.
Simon, E. D. (Manchester,Withingtn.)
Varley, Frank B.


Nichol, Robert
Simon, Rt. Hen. Sir John
Viant, S. P.


Nixon, H.
Simpson, J. Hope
Vivian, H.


O'Connor, Thomas P.
Sinclair, Major Sir A. (Caithness)
Wallhead, Richard C.


O'Grady, Captain James
Smillie, Robert
Ward, G. (Leicester, Bosworth)


Oliver, George Harold
Smith, Ben (Bermondsey, Rotherhithe)
Ward, Col. J. (Stoke upon Trent)


Oliver, P. M. (Manchester, Blackley)
Smith, T. (Pontefract)
Watson, W. M. (Dunfermline)


Paling, W.
Smith, W. R. (Norwich)
Webb, Lieut.-Col. Sir H. (Cardiff, E.)


Palmer, E. T.
Snell, Harry
Webb, Rt. Hon. Sidney


Parkinson, John Allen (Wigan)
Snowden, Rt. Hon. Philip
Wedgwood, Col. Rt. Hon. Josiah C.


Pethick-Lawrence, F. W.
Spence, R.
Welsh, J. C.


Ponsonby. Arthur
Spencer, George A. (Broxtowe)
Westwood, J,


Potts, John S.
Spencer, H. H. (Bradford, S.)
Wheatley, Rt. Hon. J.


Pringle, W. M. R.
Spero, Dr. G. E.
Whiteley, W.


Raffety, F. W.
Stamford, T. W.
Wignall, James


Rathbone, Hugh H.
Stephen, Campbell
Williams, Dr J. H (Llanelly)


Raynes, W. R.
Stewart, J. (St. Rollox)
Williams, Lt.-Col. T.S.B.(Kenningtn.)


Rendall, A.
Sullivan, J.
Williams, T. (York, Don Valley)


Richards, R.
Sunlight, J.
Wilson, C. H. (Sheffield, Attercliffe)


Richardson, R, (Houghton-le-Spring)
Sutherland, Rt. Hon. Sir William
Wilson, R. J. (Jarrow)


Ritson, J.
Sutton, J. E.
Windsor, Walter


Robertson, T. A.
Terrlington, Lady
Wintringham, Margaret


Robinson, S. W. (Essex, Chelmsford)
Thomas, Rt. Hon. James H. (Derby)
Woodwark, Lieut.-Colonel G. G.


Robinson, W, E. (Burslem)
Thompson, piers G. (Torquay)
Wright, W.


Romeril, H. G.
Thorne, G. R. (Wolverhampton, E.)



Rose, Frank H.
Thorne, W. (West Ham, Plaistow)
TELLERS FOR THE AYES.—


Royle, C.
Thornton, Maxwell R.
Mr. Frederick Hall and Mr. Warne.


Scrymgeour, E.
Thurtle, E.



NOES.


Agg-Gardner, Rt. Hon. Sir James T.
Davies, Sir Thomas (Cirencester)
Lamb, J. Q.


Amery, Rt. Hon. Leopold C. M. S.
Davison, Sir W. H. (Kensington, S)
Lane-Fox, George R.


Astor, Maj. Hon. John J.(Kent,Dover)
Dawson, Sir Philip
Leigh, Sir John (Clapham)


Atholl, Duchess of
Doyle. Sir N. Grattan
Lloyd-Greame, Rt. Hon. Sir Philip


Austin, Sir Herbert
Dudgeon, Major C. R.
Locker-Lampson, G. (Wood Green)


Baird, Major Rt. Hon. Sir John L.
Eden, Captain Anthony
Lord, Walter Greaves-


Baldwin, Rt. Hon. Stanley
Edmondson, Major A. J.
Lorimer, H. D.


Banks, Reginald Mitchell
Ednam, Viscount
Lowe, Sir Francis William


Barnston, Major Sir Harry
Elliot, Walter E.
Lumley, L. R.


Beamish, T. P. H.
Elveden, Viscount
Lyle, Sir Leonard


Beckett, Sir Gervase
England, Colonel A.
MacDonald, R.


Benn, Sir A. S. (Plymouth, Drake)
Erskine, James Malcolm Monteith
Macnaghten, Hon. Sir Malcolm


Bentinck, Lord Henry Cavendish-
Eyres-Monsell, Com. Rt. Hon. B. M.
McNeill, Rt. Hon. Ronald John


Berry, Sir George
Fade, Major Sir Bertram Godfray
Makins, Brigadier-General E.


Betterton, Henry B.
Ferguson, H.
Marriott, Sir J. A. R.


Birchall, Major J. Dearman
FitzRoy, Captain Rt. Hon. Edward A.
Martin, F. (Aberd'n & Kincardine, E.)


Bird, Sir R. B. (Wolverhampton, w.)
Forestler-Walker, L.
Meller, R. J.


Blundell. F. N.
Gilmour, Colonel Rt. Hon. Sir John
Millar, J. D.


Bourne, Robert Croft
Greene, W. P. Crawford
Mitchell. W. F. (Saffron Walden)


Bowater, Sir T. Vansittart
Grenfell, Edward C. (City of London)
Moore-Brabazon, Lieut.-Col. J, T. C.


Bowyer, Capt. G. E. W.
Gretton, Colonel John
Moulton, Major Fletcher


Brass, Captain W.
Guinness, Lieut.-Col. Rt. Hon. W. E.
Nail, Lieut.-Colonel Sir Joseph


Brassey, Sir Leonard
Hacking, Captain Douglas H.
Newman, Sir R. H. S. D. L. (Exeter)


Bridgeman, Rt. Hon. William Clive
Hall. Lieut.-Col. Sir F. (Dulwich)
Newton, Sir D. G. C. (Cambridge)


Buckingham, Sir H.
Hannon, Patrick Joseph Henry
Nield, Rt. Hon. Sir Herbert


Bullock, Captain M.
Harland, A.
O'Neill, Rt. Hon. Hugh


Burney, Lieut.-Com. Charles D.
Harmsworth, Hon. E. C. (Kent)
Ormsoy-Gore, Hon. William


Butler, Sir Geoffrey
Hartington, Marquess of
Owen, Major G.


Butt. Sir Alfred
Henn, Sir Sydney H.
Pease, William Edwin


Caine. Gordon Hall
Hennessy, Major J, R. G.
Pennefather, Sir John


Cautley, Henry Strother
Herbert, Dennis (Hertford, Watford)
Percy, Lord Eustace (Hastings)


Cayzer, Sir C. (Chester, City)
Herbert, Capt. Sidney (Scarborough)
Perring, William George


Cayzer, Maj. Sir Herbt,R.(Prtsmth.S.)
Hoare, Lt.-Col. Rt. Hon. Sir S. J. G.
Pielou, D. P.


Cecil, Rt. Hon. Sir Evelyn (Aston)
Hobhouse, A. L.
Pilditch, Sir Philip


Chamberlain, Rt. Hon. N. (Ladywood)
Hogbin, Henry Cairns
Pownall, Lieut.-Colonel Assheton


Chapman, Sir S.
Hogg, Rt. Hon. Sir D. (St. Marylebone)
Raine, W.


Clayton, G. C.
Hope, Rt. Hon. J. F. (Sheffield, C.)
Rawson, Alfred Cooper


Colfox, Major Wm. Phillips
Home, Sir R. S. (Glasgow, Hillhead)
Rees, Sir Beddoe


Conway, Sir W. Martin
Howard, Hon. D.(Cumberland,North)
Reid, D. D. (County Down)


Cope, Major William
Howard-Bury, Lieut.-Col. C. K.
Remer, J. R.


Craig, Captain C. C. (Antrim, South)
Inskip, Sir Thomas Walker H.
Remnant, Sir James


Craik, Rt. Hon. Sir Henry
Jackson, Lieut.-Colonel Hon. F. S.
Rentoul, G. S.


Crooke, J. Smedley (Deritend)
James, Lieut.-Colonel Hon. Cuthbert
Rhys, Hon. C. A. U.


Curzon, Captain viscount
Jephcott, A. R.
Roberts, Samuel (Hereford, Hereford)


Davies, Alfred Thomas (Lincoln)
Joynson-Hicks, Rt. Hon. Sir William
Robinson, Sir T. (Lanes., Stretford)


Davies, David (Montgomery)
Kindersley, Major G. M.
Ropner, Major L.




Roundell, Colonel R. F.
Sykes, Major-Gen.Sir Frederick H.
Wolmer, Viscount


Russell, Alexander West- (Tynemouth)
Thomson, Sir W. Mitchell-(Croydon,S.)
Wood, Major Rt. Hon. Edward F. L.


Samuel, A. M. (Surrey, Farnham)
Titchfield, Major the Marquess of
Wood, Sir H. K. (Woolwich, West)


Sandeman, A. Stewart
Tryon, Rt. Hon. George Clement
Worthington-Evans, Rt. Hon. Sir L.


Savery, S. S.
Waddington, R.
Wragg, Herbert


Sheffield, Sir Berkeley
Ward, Lt.-Col. A.L.(Kingston-on-Hull)
Yate, Colonel Sir Charles Edward


Shepperson, E. W.
Warrender, Sir Victor
Yerburgh, Major Robert D. T.


Spender-Clay, Lieut.-Colonel H. H.
Weston, John Wakefield



Stanley, Lord
Wheler, Lieut.-Col. Granville C. H.
TELLERS FOR THE NOES.—


Steel, Samuel Strang
Windsor-Clive, Lieut.-Colonel George
Commander B. Eyres-Monsell and


Sueter, Rear-Admiral Murray Fraser
Wise, Sir Fredric
Colonel Gibbs.


Question put, and agreed to.

Further Amendment made: In line 5, leave out the word "requirements," and insert instead thereof the word "provisions."—[Mr. Snowden.]

Mr. HOPE: I beg to move as an Amendment to the proposed new Clause, in lines 5 and 6, to leave out the words "the regulations or by-laws of a local authority," and to insert instead thereof the words
are certified by the local authority as necessary for modern needs.
This is the Amendment to which I referred a few minutes ago. The object of it is to meet the view of the Chancellor of the Exchequer, that the landlord should not get the benefit of what might be called fancy or unnecessary expenditure, or any capital expenditure which is really not required by the property. The object is also to meet the case where such expenditure is really morally required but would not fall within the definition of the Clause at present as complying with the regulations or by-laws of a local authority. The effect will be that if a landowner has cottages for which repairs are necessary, old cottages, for example, which are obviously not up to the modern standard, he can go to the local authority and say, "Here are my plans. I wish to bring these cottages up to your standard of new cottages and up to a proper modern standard. You cannot force me to do this, but your certificate will show that I am doing as much as, but no more than, is necessary to bring them up to a modern standard." In that case he could have the benefit of the concession.

Mr. SNOWDEN: It is quite obvious that I cannot accept this Amendment. It goes even further than any attempt that has been made from the opposite side of the House in the course of this Debate. In the first place, the right hon. Member asks that the maintenance expenditure shall be admitted to relief if it is certified by the local authority as coming up to the standard of modern requirements or needs. Who is going to
define modern requirements or needs? You might have a local authority which says that a bathroom is not necessary. Therefore, the property would not be certified if a bathroom were put in. Another local authority might say that a washhouse was not necessary. There might be other local authorities with different views of modern requirements. The landlord would get exemption in one case and not in the other. If you had a local authority with very exalted ideas of what is necessary for the comfort and convenience of a farm labourer, there would be no limit at all to the amount which the landlord could claim for capital expenditure. I framed my new Clause in order to meet hon. Members opposite. I was under the impression that the Clause was to be accepted, and I have been very much surprised at the trend of the discussion which has taken place. It is only fair that I should say plainly and straightly that I am not prepared to go beyond what I have conceded in this new Clause.

Sir L. WORTHINGTON-EVANS: I am very sorry that the Chancellor of the Exchequer has taken this unnecessarily firm stand. What is the object of this Amendment? It is to improve the cottages in the rural areas. When the Chancellor of the Exchequer says, "If there is an enlightened local authority there would be no limit to the expenditure," he has to remember that he has not been called upon to make that expenditure. The State is not called upon to make it, and the people who benefit by it are the occupants of the houses, against whom no additional rent is to be charged. So the right hon. Gentleman is getting the housing done for the benefit of people without any charge upon the Exchequer at all. I agree that the Chancellor of the Exchequer is entitled to some protection. Even though improvement in housing is very desirable, we do not want enormously extravagant expenditure to be made. Surely the protection which my right hon. Friend has put in this Amendment is sufficient. It is
not the landlord who is to say how much he will expend. He has to go to the local authority and say, "How much do you want me to spend in order to bring the old cottage up to modern requirements?" The Chancellor of the Exchequer replies, "But the local authority may also be extravagant, and you cannot define modern requirements.'" But you can, in the regulations relating to new houses.
All that we want is to be allowed to bring up the old houses to the standard required by the regulations relating to new houses. That is the limit of the protection of the Chancellor of the Exchequer. When he says that one local authority might differ from another, I reply that that is local self-government. Such things happen in every case now. The building regulations of one local authority frequently differ from the building regulations of another. There is no harm in that. Unless the Chancellor of the Exchequer wishes to get rid of local self-government altogether I cannot understand him. All that he needs to protect himself against is some extraordinary landlord who for the love of expenditure spends a ridiculous sum. The right hon. Gentleman is protected by the Amendment, because the local authority will have to assent to expenditure which is reasonably necessary to bring the house up to modern needs. The Chancellor of the Exchequer even now ought to realise that we are not asking for anything extravagant, but for something which is for the benefit of rural housing.

Mr. ACLAND: I think the House will have to let experience tell its own tale with regard to this matter. The Chancellor of the Exchequer has hardened his heart because he is sincerely and genuinely persuaded that his Clause is something and will give some relief. In my opinion it will do absolutely nothing. I cannot conceive any Statute making any provision with regard to old farmhouses, farm buildings or cottages. With regard to the regulations and by-laws of a local authority, I would point out that a local authority has not power to make regulations or by-laws with regard to existing cottages. It has power only to condemn them or not. It may give advice as to what sorts of alterations are necessary to avoid condemnation. But that is not regulation or by-law. We proceed slowly in these matters. I wish that successive
Chancellors of the Exchequer were a little more reasonable and generous to landowners who honestly desire to improve their property without benefiting by it themselves. But Chancellors have always been very stubborn, and it has taken long years to get to the present position. There is nothing for it but to show the Chancellor of the Exchequer by experience that this really means absolutely nothing, and then he may be inclined to draft words which really will go in the direction in which he wants to go.

Mr. G. SPENCER: In my opinion the Chancellor of the Exchequer is justified in protecting himself only with regard to that class of landlord who would carry out these improvements on purpose to sell. If this Amendment made provision for protecting the revenue against such a landlord, who improves his cottages in order to sell them and not to benefit the tenant, I would go into the Division Lobby against my own Government. As the Amendment stands it means that the landlord who has cottage property belonging to farms might put them in repair and immediately sell them, and there would be no guarantee that afterwards the rents would remain the same. That is the failure of the Amendment. I am not over-concerned about the revenue; that is the Chancellor's look-out. But I do say that if you have cottage property in a rural area, and the landlord is prepared to spend money upon it and to put it in order, even to the standard of requirements of modern cottage property, whether it is capital expenditure or not, so long as he is going to let the tenants stay in the cottages at the same rent, I shall support the proposal. But I would not support it if the improvements were made with a view to the sale of the houses. That would be simply deceiving the Chancellor of the Exchequer and everybody else. If an Amendment can be designed by the other side making possible the improvement of property on behalf of the tenant, and giving the landlord no chance of selling the property so as to evade his responsibility, I would support such an Amendment.

Mr. HOPE: If I move the Recommittal of the Bill with that object in view, will the hon. Member support me?

Amendment negatived.

Clause, as amended, added to the Bill.

NEW CLAUSE.—(Amendment of subs. (3) of s. 39 of Income Tax Act, 1918.)

Paragraph (ii) of the proviso to paragraph (b) of Sub-section (3) of Section thirty-nine of the Income Tax Act, 1918 (which Sub-section provides for the exemption from tax of certain income of savings banks), shall have effect as though for the words "where the interest paid or credited to any depositor in the year for which exemption is claimed by the bank exceeds the sum of five pounds," there were substituted the words "where in the year for which exemption is claimed by the bank, the interest paid or credited to any depositor out of the income of its funds, other than interest and dividends arising from investments with the National Debt Commissioners, exceeds the sum of fifteen pounds."—[Mr. Snowden.]

Brought up, and read the First time.

Mr. SNOWDEN: I beg to move "That the Clause be read a Second time."
This question was raised on the Committee stage of the Bill, and I promised to give the matter consideration. I understand that the Clause meets the case which was raised.

Sir JOHN MARRIOTT: On behalf of those who are interested in this matter, which is a matter of some considerable significance, I beg to thank the Chancellor of the Exchequer cordially for what he has done.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Exemption of certain profits of agricultural societies.)

(1) Any profits or gains arising to an agricultural society from an exhibition or show held for the purposes of the society shall, if they are applied solely to the purposes of the society, be exempt from Income Tax.

(2) The expression "agricultural society" in this Section means any society or institution established for the purpose of promoting the interests of agriculture, horticulture, live-stock breeding, or forestry.—[Mr. Snowden.]

Brought up, and read the First time.

Mr. SNOWDEN: I beg to move, "That the Clause be read a Second time."
This is another heritage from the Committee stage of the Bill. It was submitted by Members in all parts of the House that it was not fair to tax the profits of an agricultural society arising from an exhibition or show, and I think I have met the position in this new Clause.

Captain FITZROY: The new Clause appears to meet the case which was put forward with regard to agricultural societies, and I thank the right bon. Gentleman for the concession made.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Relief from tax assessed on income under Case V. of Schedule D.)

The following Rule shall he added after Rule 3 of the Rules applicable to Case V of Schedule D:

4. Where a person who has been charged with tax in respect of income from a possession out of the United Kingdom proves that the total amount of tax, computed in accordance with Rule 1 of the Rules applicable to Cases I and II of Schedule D which was paid in respect of that income for the first three complete yearn of assessment during which he was the owner of the possession, exceeds total amount which would have been paid if he had been assessed for each of those years on the actual amount of the income of each year, he shall be entitled to repayment of the excess.

An application for repayment under this Rule shall be made within twelve months after the end of the three years aforesaid and shall be determined by the Commissioners by whom the assessment for the last of the said three years was made.—[Mr. Graham.]

Brought up, and read the First time.

Mr. GRAHAM: I beg to move, "That the Clause be read a Second time."
This Clause is of a rather technical character, but may be quite briefly and simply explained. During the Committee stage the hon. Baronet the Member for the Erdington Division of Birmingham (Sir A. Steel-Maitland) drew attention to the taxation of certain possessions outside the United Kingdom, more particularly during the first three years of that taxation. The system at the moment is roughly this, that as regards the first year, the tax falls on that year as regards the second year, the tax is also on the first year, as the preceding year; and as regards the third year, the tax falls upon an average of the first two years. It was represented to us that in the first year, which was perhaps prosperous, a business of that kind might be established and a position attained, but if the succeeding years were not prosperous a hardship would be involved to the taxpayer on the
principle which we now follow, and the taxpayer might have to pay more than he would be called on to pay if each year were assessed separately. By administrative custom it has been possible so far to meet that difficulty, and all we are doing in response to the suggestion of the hon. Baronet is to give legislative effect to what has been the administrative arrangement. In a single sentence the new scheme will be this, that at the end of the first three years it will be possible for the taxpayer to come along and get the benefit of an assessment as on each of the three years, that is to get the benefit of taxation on each of the three separate years of assessment. That is broadly what the new Clause achieves.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Amendment of s. 11 of 13 and 14 Geo. 5, c. 14.)

Section eleven of the Finance Act, 1923 (which gives relief from Entertainments Duty in the case of certain entertainments), shall be amended as follows:

(1) Paragraph (b) of Sub-section (1) shall cease to have effect;
(2) The following shall be substituted for paragraph (c):

(b) That the entertainment consists solely of an exhibition—

(i) of the products of an industry, or of materials, machinery, appliances, or foodstuffs used in the production of these products, or displays of skill by workers in the industry in work pertaining to the industry; or
(ii) of works of graphic art, sculpture, and arts craftsmanship or of one or more of such classes of works, executed and exhibited by persons who practice graphic art, sculpture, or arts craftsmanship far profit and as their main occupation, or of displays of skill by such persons in such arts or crafts; or
(iii) of articles or displays of skill which are of material interest in connection with questions relating to the public health;

or consists solely of such exhibitions or displays of skill, together with a performance of music by a band or an exhibition of work or displays of skill by children under the age of sixteen years, or by young persons attending a school or other educational institution—[Mr. Snowden.]

Brought up, and read the First time.

Mr. SNOWDEN: I beg to move, "That the Clause be read a Second time."
This is also a redemption of a promise which I gave during the Committee stage of the Bill dealing with Entertainments Duty. The point which I had to meet was the extension of the exemption from Entertainments Duty in respect of industrial exhibitions or shows, so that mere side-shows such as exhibitions of children's school work should not constitute a disqualification for exemption. There was another hardship experienced in connection with the administration of the law as it exists at present. A society states what its specific purpose is. If it be an agricultural society, it will say that it exists for the promotion of agriculture, or if it exist for the promotion of public health, it will state that object. If in an agricultural exhibition there were introduced exhibits outside the specified object of the society, that disqualified it for exemption from the duty. I have removed that altogether, and if a society promotes an entertainment which does not consist solely of an exhibition of the products of the industry which it is established to promote, or of materials, machinery, and so on, connected with industry, that will not in future prevent the grant of exemption from duty. Another hardship experienced in the administration of the Entertainments Duty as applied to exhibitions was that, if the work of school children were placed on exhibition, it was a disqualification for exemption. I have removed that altogether. As hon. Members will see, the last part of the Clause refers to
such exhibitions or displays of skill together with a performance of music by band or an exhibition of work or displays of skill by children under the age of 16 years or by young persons attending school or other educational institutions.
I think the Amendment will meet the grievances which were expressed during, the Committee stage.

Mr. RAWLINSON: Is it intended to exclude all picture galleries like the Royal Academy of Art. The wording of the Clause is rather broad. It refers to any exhibition which consists solely
of works of graphic art, sculpture, and arts craftsmanship … executed and exhibited by persons who practise graphic art, sculpture, or art, craftsmanship for profit or as their main occupation.
How far is that meant to go?

Lieut.-Colonel GUINNESS: There is another point on which I should like some light. I have not had time to look up the discussion in the Committee stage, but I think the grievance was brought forward that if an agricultural society has a horse-jumping competition at a show, it is disqualified for any remission, and as I read the new Clause that disqualification will be continued, because displays of skill are limited to, those by workers in an industry. If the wording were "by those connected with the object of the show," then exhibitions of horsemanship or jumping or so forth would not rule out a show from the benefit of exemption. I suggest that the right hon. Gentleman by a slight alteration in the wording of the Clause could allow these competitions to take place and meet another grievance which was raised in the former Debate.

Mr. SNOWDEN: In reply to the question put by the right hon. and learned Member for Cambridge University (Mr. Rawlinson) exhibitions by professional artists would be exempt under this Clause.

Mr. RAWLINSON: Is the right hon. Gentleman quite sure that the words "arts craftsmanship" have no technical meaning?

Mr. SNOWDEN: I am advised that professional art exhibitions would he covered by this Clause. I am afraid that I cannot go so far as the right hon. and gallant Member for Bury St. Edmunds (Lieut.-Colonel Guinness) asks. We must draw the line somewhere, and if we were to extend the exemption so as to cover sports, and so forth, I am afraid we should be giving the whole show away. I think I am meeting in this new Clause all the real cases of hardship which were raised, and I ask the House to accept it now. If in the meantime any other grievances arise, they can be considered at another time.

Mr. LAMB: I thank the right hon. Gentleman for the concession he has made. I had the honour of bringing this matter to his notice, and I can assure him that his decision will give great satisfaction to county educational committees and agricultural committees, and will be of great assistance to rural industries.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Increased rebate from Excise and Customs duties in case of black beer, etc.)

(1) In the case of black beer of a specific gravity of one thousand two hundred degrees or upwards, the rebate from the Excise Duty to be allowed under Section two of the Finance Act, 1923, and the rebate from the Customs Duty to be allowed under Section three of that Act shall, subject as hereinafter provided, instead of being calculated at the rates for which provision is made by those Sections respectively, be in each case calculated at the rate of five pounds for every thirty-six gallons of beer of a specific gravity of one thousand two hundred and twenty degrees and so in proportion for any difference in quantity or gravity.

Provided that the foregoing provision shall not apply to black beer brewed on the premises of a brewer for sale who brews on or sends out from the same premises any beer other than black beer.

(2) A brewer of beer for sale shall not have on the premises used by him for the purposes of his business any black beer of a specific gravity of one thousand two hundred degrees or upwards, unless the beer was brewed by him on the premises, or mix any such beer with any other beer.

(3) If any person acts in contravention of the foregoing Sub-section he shall, in respect of each offence, be liable to an excise penalty of fifty pounds, and the beer in respect of which the offence was committed shall be forfeited.

(4) In this Section the expression "black beer" means beer of the descriptions called or similar to black beer mum, spruce, or Berlin white beer, and any other preparations, whether fermented or not, of a similar character, and for the purposes of this Section the specific gravity of a fermented preparation shall be taken to be the specific gravity of the worts thereof before fermentation.—[Sir C. Wilson.]

Brought up, and read the First time.

Sir CHARLES WILSON: I beg to move, "That the Clause be read a Second time."
I desire to thank the Chancellor of the Exchequer for his courtesy and help in connection with this matter. The House may not know a great deal about black beer. The peculiar thing about it is that it is not beer at all but a sweetened cordial, and because it has been described as beer it has been taxed like ordinary beer, with the result that the industry is almost destroyed. If this Clause be accepted it will give much needed relief to what otherwise will be a decaying industry. In the old days this was, and to some extent it still is, a remedy for colds, and is supposed to be very effective. I
hope that the Clause will be accepted by the House, and I will only say to the Chancellor of the Exchequer that as this commodity has to be brewed a considerable time before it can be issued to the consumers, I hope he will allow this concession to go back to the 1st April.

Major BIRCHALL: I beg to second the Motion.

Mr. SNOWDEN: I am quite sure there is a case for the acceptance of this new Clause. The hon. Member's speech brought back to my own recollection the remedies of my childhood when black beer was a specific in Yorkshire—I believe its consumption is almost confined to Yorkshire—for children suffering from colds. I am afraid it would be administratively impossible to make the alteration which the hon. Member suggests with regard to the date.

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Exemption of Easter offerings from Income Tax.)

Easter offerings voluntarily paid to ministers of religion shall be exempt from Income Tax.—[Mr. Rawlinson.]

Brought up, and read the First time.

Mr. RAWLINSON: I beg to move "That the Clause be read a Second time."
The object of this Clause is to exempt from Income Tax, the Easter offerings which are voluntarily paid to a minister of religion. It is a matter which does not involve the Exchequer to any very large extent otherwise I should not have proposed it. This particular tax involves a great injustice. Originally there were a large number of ecclesiastical offerings, such as Easter, Whitsuntide, Christmas and so forth, but the only customary one which remains is the Easter offering. It is absolutely a voluntary payment to the vicar or rector of the parish and is made without any compulsion by the congregation. Again, in the case of Nonconformist, bodies, there are certain offerings made to the pastor as pastor. When the Income Tax Act was passed in 1842, I do not suppose that anybody, either lawyers or anybody else, thought that gifts of that kind would be subject to Income Tax, but in 1907 some enterprising Surveyor of Taxes, I think
in Sussex, took the point, in a particular case where Easter offerings had been given in a particular diocese, that they were assessable to Income Tax. The Commissioners found against the Crown, and so did the late Mr. Justice Bray, who held that they were not liable to Income Tax, and I think one may take it that that was the general view at that time and that it had been the view ever since 1842. Mr. Justice Bray's decision was overruled by the Court of Appeal, and also by the House of Lords, and from that time it has been held that these offerings are liable to Income Tax. One of the Judges in the Court of Appeal particularly regretted having to come to that conclusion and pointed out in his judgment that the clergy paid a greater proportion of their receipts in rates and taxes than any other members of the community, and a similar expression of regret was made in the House of Lords.
May I put a second point, possibly from a rather more business point of view? Lord Loreburn, in giving judgment in that case, pointed out quite clearly that this was a voluntary payment for services. If it was a voluntary payment for services, it was liable to Income Tax, but, if it was a mere present, then it was not liable to Income Tax. Consider the evasion that is invited by such a state of affairs. Take the pastor of a Nonconformist congregation in whose behalf an offertory or collection is made. How far is it made to him qua pastor of the congregation, or how far is it made to him as a personal present to himself? The whole test is whether it is a voluntary payment in respect of services and not a mere present. Supposing a person in the Church of England is anxious to give money in the ordinary way, he probably knows that he is going to make the vicar liable to Income Tax, and he will be inclined to find some way round in order to make it a personal present to the vicar, either by giving it in kind or giving it to his son or daughter, so as to get away from the difficulty of the vicar having to return it as income. Further, it makes an excuse for those people who claim that they are not giving Easter offerings because they propose to make it up in some other way. Those good resolutions sometimes do not come off. I therefore press on the Chancellor of the Exchequer that this is a concession which might be
made by him. It is a tax that is very difficult to collect and one that is very easy to evade, and I submit that it is a very great injustice to a class of people, both in the Church of England and in other Churches, who never were intended to be taxed in this particular way, and who for some 40 years never were so taxed, when, by a particular construction of the Act of Parliament, they were made liable to the tax in 1907.

Lieut.-Colonel SPENDER-CLAY: I should like to support this Clause, for this reason, that it is very easy to evade this tax. I understand that if a member of a congregation desires to give a present to a vicar in the Church of England, lie has only to put the amount in the bank for the vicar, and it escapes Income Tax assessment. It would be quite easy for a number of members of a congregation to join together and give a joint gift, which would not be put in the bag or appear in the offertory at all, and would be in the nature of a gratuity and not for his services as clergyman, Therefore, it seems to me that there is a considerable opening here for evasion. I think the clergy ought not to be put in the position of having difficulties with their conscience in this way, and I think it would be far better to legalise this practice, in view of the fact that the tax can so easily be evaded.

Mr. SNOWDEN: This proposal, like Easter offerings, is an annual institution. It has been, I believe, repeatedly before the House of Commons, and the House has never accepted it. I should be very sorry to think that the evasion of liability to Income Tax was carried on inside the churches to the extent that would appear to be the case from the statements of those who have spoken in support of this Clause. I wonder if the right hon. Member for Cambridge University (Mr. Rawlinson) really sees how far this Clause would go, if carried. I suppose that he himself would not limit Easter offerings to voluntary collections taken on Easter Day?

Mr. RAWLINSON: Voluntary offerings made upon Easter Day or some other day.

Mr. SNOWDEN: Or any other day. Therefore, what he is proposing is that all voluntary collections taken in Christian churches for the maintenance of a
pastor should be exempt from Income Tax. In that case every Nonconformist minister in the country would be exempt from Income Tax. His salary is raised by that means, and by that means alone, and I think that it is not necessary to say more in order to show the impossibility of accepting this Clause.

Mr. D. HERBERT: Are not Nonconformist ministers' salaries recoverable by law, whereas these offerings are not? Surely that is the difference.

Mr. SNOWDEN: The hon. Member for Watford (Mr. D. Herbert) is a lawyer, and I hesitate to express a legal opinion but I should very much doubt if the salary of a. Nonconformist minister is recoverable by law. I never heard of the deacons being sued in the County Court for a salary.

Mr. D. HERBERT: I do not think the right hon. Gentleman has quite followed what is meant by this Clause, nor has he quite understood the way in which my hon. Friends have mentioned that the tax is avoided. There is a definite difference between the remuneration for which a clergyman or anyone else agrees to do his duty and a gift which is made to him by somebody who appreciates the services that he has rendered. Here comes the difficulty. Somebody would, in the ordinary course, wish to give a big donation to the offertory collected in a church on Easter clay, because it is to go for the material benefit of the incumbent of the parish, but, knowing what has been taking place, he says: "No, I shall only put the conventional half-crown"—or what ever it may be—" in collection bag." He goes to the parson later in the year and says: "I am very fond of you, and I very much appreciate the work that you are doing. I want to make you a present, and I hope you will accept it." The right hon. Gentleman, as I understand, admits that that would not be taxable, and there is the whole point of this Clause. By making Easter offerings taxable, you are making them a part of the legal remuneration of the minister and surely that is contrary to the intention of those who give these Easter offerings, and surely it is quite properly avoided if people choose to say, "I shall only give at that offertory my usual coin, and at some other time of the year, when-
ever it pleases me, or when my bank balance is high, I shall give a present to this man, whom I consider to be underpaid."
The whole point is whether this is a definite part of the remuneration for which the clergyman agrees to do his work. Perhaps I was a little wrong in intimating the possibility of a clergyman of any denomination suing for his remuneration. I am not a member of a Nonconformist church myself, but I believe that in most cases there is a definite agreement, however much money is subscribed by the congregation, that he should receive not less than a certain amount. It is all very well to say you cannot contemplate that man suing for it. That may be so, but it does not alter the fact that that is the remuneration for which he has agreed to do his work, and if those who benefit by his services wish to recognise that benefit, surely they are entitled to give him something extra. Supposing he is a rich man, instead of giving him money they give him a service of plate. You are not going to tax him on that, surely, and I submit that these Easter offerings are nothing more than voluntary presents, which should not be taxable because they are given in money instead of in kind.

Mr. BLACK: I would ask the Chancellor of the Exchequer not to give way on this matter. The point has been brought forward by the hon. Member for Watford (Mr. D. Herbert) that Nonconformist ministers have a fixed salary, and in some cases I believe they do, but there are many cases in which a minister is just as dependent on the offerings brought by the congregation, and has no definite understanding as to what the precise amount of the salary shall be. It appears to me that when you have a case of an Established Church clergyman receiving year by year a contribution, it is taken into consideration by the reverend gentleman when he is making the arrangement with the Church to which he goes. In the first instance, there is some kind of idea given to him as to what the average amount of the annual offering amount to. It appears to me that under these circumstances it is almost a condition of his engagement, and I do not see the point of coming to the House and asking that Income Tax should not be paid upon the amount. For these
reasons, I hope the Chancellor of the Exchequer will resist the proposed new Clause.

Sir ROBERT KAY: I take a different line in this matter from the hon. Member (Mr. Black) who has just sat down, and I very much hope that the Chancellor of the Exchequer will see his way to yield to hon. Friends on the opposite side of the House. It may be true that there are some churches where a minister receives all his allowance from voluntary funds, but that is not the method ruling in the church to which I belong, the Wesleyan Church. Our ministers get a fixed allowance for their services, but they also get certain amounts over and above for house-rent, children, and other allowances, the particulars of which they consider, and properly consider, should be given in their Income Tax returns. But apart from this, from time to time a minister of the Wesleyan Church may probably have a period of severe personal or family sickness, or other special claims upon him that, for the time being, place him in some difficulty. The laymen of our churches constantly, in a case like that, and in a quiet way, go around and collect £10, £20 or £30, as the case may be, and, without the minister knowing anything about it till then, take it to him as a proof of kindly goodwill. In a case like this it is the last thing in our minds that such an amount should be treated as income or render our ministers liable to pay Income Tax on the amount, and that, as regards our ministers, although desirous to fill up honourably and accurately their Income Tax return, I question whether the minister himself ever imagines that a gift like this is one which he should enter upon his Income Tax paper. In like manner, I believe these gifts at Easter time, winch are made only once a year, are freewill voluntary gifts on the part of the people who desire to show their goodwill to their pastor. These gifts are not in any sense income which is looked upon as part of the salary. I hope that the Chancellor of the Exchequer will yield to the solicitations made to him and accept the proposed new Clause.

Mr. RAWLINSON: I should just like to say a word in reply to the hon. Member for Harborough (Mr. Black). I venture to suggest that he misunderstands the position. I do not know whether he goes to chapel at Market Harborough, but, if
he does, I think he will find there that there are Ministers who come under an arrangement of this sort year by year. The question is one that worries some men as to whether these amounts should or should not be returned for Income Tax. A number of my clients ask my advice upon this matter, and the whole position really makes me annoyed.

Mr. BLACK: But there is all the difference in the world between occasions of this kind once in 10 or 15 years, and Easter offerings every year.

Mr. RAWLINSON: Does the hon. Member mean to say that the Minister of Market Harborough does not get a present once a year?

Mr. BLACK: I do not think he does. But, as a matter of fact, although I am the Member for the Harborough Division, I do not live in Market Harborough.

Mr. RAWLINSON: Then the hon. Member has never been in a chapel at Market Harborough? We have asked the Chancellor of the Exchequer as to what the cost would be to the Treasury. If it were to be a large sum, I should be the first person to ask to withdraw the Clause, because the right hon. Gentleman knows that in these matters I really do my best to defend the Treasury on every occasion. I do not think that same of his observations were very generous. Everyone knows that evasion is not accounted a moral obliquity. The right hon. Gentleman has not told me what the cost is likely to be. He said the matter has been brought up time after time, and if that be so, he must have some figures, and he could tell us. For my part, I think it would he a very small matter, indeed. People who have recognised salaries will have to pay as before, whether Nonconformist or Church of England: but a special voluntary offering, such as these Easter offerings are, I submit should he exempt. I do appeal most strongly to the right hon. Gentleman to make this small concession. Certainly, if he does not, I shall divide.

Sir J. MARRIOTT: I want to say one word in appreciation, of very grateful appreciation, of the speech made by the hon. Gentleman for the Elland Division (Sir R. Kay). I think that speech has been heard, and will be read to-morrow,
by all fair-minded people in this House and outside as an honourable and generous speech. I should like at this last moment to make an appeal to the Chancellor of the Exchequer in the sense of my hon. Friend opposite. I believe this concession, from a fiscal point of view, will be entirely negligible. Before we go to a Division—and we shall go to a Division unless we get a satisfactory answer—I think the House is entitled to hear either from the Chancellor of the Exchequer or from the Financial Secretary to the Treasury what the concession would cost. If they convince us that this is a concession which, fiscally, ought not to be made, I will go into the Lobby with them. If, on the other hand, they tell us, as I believe they will have to do, that it is a negligible sum, then I do venture to appeal to the Chancellor. This is not a question of the Minister's salary. It is no more than the salary received by Nonconformist ministers, which is apparently a voluntary gift. It is true that this is generally made, not by any means invariably, at a particular occasion, at Easter time, but that is accidental. It might be made at any other time by means which would not be within the mesh of Income Tax law.

7.0 P.M.

Mr. PALMER: It seems to me deplorable that this House should be engaged in talking such trivialities as these. [HON. MEMBEES: "No!"] I say it is deplorable that this House should be engaged in talking such trivialities as these which appear to be put forward in favour of this Clause. I had come in here quite unprepared to speak, but, hearing the arguments put up in a case like this, I cannot forbear saying that it, seems to me that, this Clause will open the door to gross abuse and gross evasion of proper and legitimate taxation. No one knows better than I do the circumstances of, and no one has more sympathy with, the poor underpaid parson, but this is not the way to remedy his case. Most self-respecting parsons would not prefer to have their remuneration handed out to them in the shape of an Easter dole. If these men are worthy of payment for the services they render—and I know that they are—they would prefer to have it in an honest, straightforward manner, by way of salary, and that salary ought to be adequate to meet the needs of the minister. I appeal to the
Chancellor not in any way to give a passing thought to such a Clause, which can have no other effect but to open the door to evasion of the legitimate payment of Income Tax.

Mr. G. LOCKER-LAMPSON: The Chancellor of the Exchequer has been asked a very specific question in respect to this new Clause. If I understood him, he objects to it purely on fiscal grounds; then he has been asked what it will cost. I think the House is entitled to an answer to that question, for this new Clause of my hon. Friend has been on the Paper for several days, and surely the right hon. Gentleman must have known of it.

Mr. SNOWDEN: If I knew what the proposed new Clause meant, I could give an answer to the question as to the cost. It would not be very difficult to estimate the cost if the question were more specific. I asked the right hon. and learned Gentleman (Mr. Rawlinson) if he meant voluntary collections, which were made on Easier Day, and he replied, "Yes, on Easter Day, or any other day." It has been pointed out by hon. Members who know more about the practices of Nonconformists than hon. Members on the other side of the House that the salaries of Nonconformist ministers are subscribed by the voluntary offerings of their congregation. [An HON. MEMBER: "They are paid by voluntary offerings, but they are paid a fixed amount also."] That does not affect my point in the least. It is quite an unnecessary interruption for the point has already been discussed. They are paid by voluntary offerings; therefore, they come under the Clause which is under discussion. If this were to be confined to the voluntary offerings made on Easter Day in the Church of England then it would not be difficult to give an estimate. It would not be very much; indeed, I may satisfy the right hon. Gentleman by saying it would be almost negligible. But if, as seems likely from the phrasing of this Clause, we are to exempt from Income Tax the salaries of Nonconformist ministers then, of course, it would be very considerable. I am not opposing this new Clause on the ground of cost. [Interruption.] I think the hon. Member who is so vocal in his interruptions, and so silent in contributions to the Debate, must just have come into the
House or he would have heard the admission. It meant much more than Easter offerings. There is a great principle involved, and it is because of that I stand firm and ask the House to reject it.

Lord HUGH CECIL: At this moment it would be perfectly open to the Chancellor of the Exchequer, if the Clause were agreed to, to make the language more definite. The Chancellor of the Exchequer said it is a question of principle. There is a distinction between what ought to be taxed in respect of income and what ought not. What ought to be taxed is in the nature of property—that is to say, what a man can rely upon as his ordinary legal right. An hon. Member has pointed out that most ministers of the Church of England or other bodies would rather have their salaries taxed. I suggest that when he said that he was not aware that he was arguing in favour of the Clause. It is because these voluntary offerings do not go to the person as regular and settled income that the concession is being asked for. These offerings rests purely on the goodwill and the charity of those who give them. They do not differ in principle from any other present. These gifts which we are anxious to exempt are voluntary gifts given by charitable persons who wish to give a charitable donation to their minister, and I rejoice the more that a large number of Free Church ministers, as well as ministers of the Established Church, are recipients of such gifts. Wherever you have the clement of gift you ought to exempt from taxation. That is surely a sound principle. According to the present, law, as interpreted, an Easter offering is subject to Income Tax and a Christmas present is not. It would seem possible to give the same amount at Christmas and give it as an Easter present, and it would not be liable to Income Tax. It is sought to propound a distinction in law which cannot be defended. That is the true distinction this claim aims at, and, if the language be not sufficient, let the Clause be read a Second time and the Treasury amend it.

Mr. ALDEN: I do not think the Chancellor of the Exchequer can be aware of what is a growing practice in many churches of to-day. I believe it comes originally from America. The idea is to
circulate among members of the church that there is to be a collection on behalf of the minister of the church on a certain day. I have known £1,000 to be given in one collection in one clay. I think you do lay yourselves open to very grave misapprehension if you allow this Clause to be carried as it stands, because it would be quite possible on Easter day to get a very large collection at some churches towards the stipend of the vicar or minister. If the Easter offering could be a personal gift not made in the form of

a collection in the church it would be free from the objections that have been raised against it. I do assure the House that there is a real danger, and, as the Chancellor of the Exchequer says, the matter ought to be more carefully considered. I hope the House will not divide on a point on which we are all in sympathy.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 176; Noes, 256.

Division No. 153.]
AYES.
[7.10 p.m.


Agg-Gardner, Rt. Hon. Sir James T.
Falle, Major Sir Bertram Godfray
Newton, Sir D. G. C. (Cambridge)


Astor, Maj. Hn. John J. (Kent, Dover)
Ferguson, H.
Nicholson, O. (Westminster)


Atholl, Duchess of
FitzRoy, Capt. Rt. Hon. Edward A.
Nicholson, William G. (Petersfield)


Austin, Sir Herbert
Forestler-Walker, L.
O'Neill, Rt. Hon. Hugh


Baird, Major Rt. Hon. Sir John L.
Galbraith, J. F. W.
Ormsby-Gore, Hon. William


Baldwin, Rt. Hon. Stanley
Gates, Percy
Pease, William Edwin


Balfour, George (Hampstead)
Gibbs, Col. Rt. Hon. George Abraham
Pennefather, Sir John


Barnston, Major Sir Harry
Gilmour, Colonel Rt. Hon. Sir John
Percy, Lord Eustace (Hastings)


Beamish, T. P. H.
Gould, James C. (Cardiff, Central)
Perkins, Colonel E. K.


Beckett, Sir Gervase
Greene, W. P. Crawford
Perring, William George


Bellairs, Commander Carlyon W.
Grenfell, Edward C. (City of London)
Plelou, D. P.


Benn, Sir A. S. (Plymouth, Drake)
Gretton, Colonel John
Pownall, Lieut.-Colonel Assheton


Bentinck, Lord Henry Cavendish
Hacking, Captain Douglas H.
Raine, W.


Berry, Sir George
Hall, Lieut.-Col. Sir F. (Dulwich)
Rawson, Alfred Cooper


Betterton, Henry B.
Hannon, Patrick Joseph Henry
Rees, Capt. J. T. (Devon, Barnstaple)


Birchall, Major J. Dearman
Harbord, Arthur
Remer, J. R.


Blundell, F. N.
Harland, A.
Remnant, Sir James


Bourne, Robert Croft
Harmsworth, Hon. E. C. (Kent)
Rhys, Hon. C. A. U.


Bowyer, Capt. G. E. W.
Hartington, Marquess of
Roberts, Samuel (Hereford, Hereford)


Brass, Captain W.
Harvey, T. E. (Dewsbury)
Robinson, Sir T. (Lanes., Stretford)


Brassey, Sir Leonard
Henn, Sir Sydney H,
Ropner, Major L.


Bridgeman, Rt. Hon. William Clive
Hennessy, Major J. R. G.
Roundell. Colonel R. F.


Buckingham, Sir H.
Herbert, Dennis (Hertford, Watford)
Samuel, A. M. (Surrey, Farnham)


Bullock, Captain M.
Hobhouse, A. L.
Sandeman, A. Stewart


Burman, J. B.
Hogbin, Henry Cairns
Savery, S. S.


Burney, Lieut.-Com. Charles D.
Hogg, Rt. Hon.Sir D. (St. Marylebone)
Scott, Sir Leslie (Liverp'l, Exchange)


Butler, Sir Geoffrey
Hood, Sir Joseph
Shepperson. E. W.


Caine, Gordon Hall
Hope, Rt. Hon. J. F. (Sheffield, C.)
Smith-Carington, Neville W.


Cautley, Sir Henry S.
Horlick, Lieut.-Colonel J. N.
Somerville, A. A. (Windsor)


Cayzer, Sir C. (Chester, City)
Howard-Bury, Lieut.-Col. C. K.
Spears, Brig. Gen. E. L.


Cayzer, Maj. Sir Herbt.R.(Prtsmth.S.)
Hughes, Collingwood
Spender-Clay, Lieut.-Colonel H. H.


Cecil, Rt. Hon. Sir Evelyn (Aston)
Hunter-Weston, Lt.-Gen. Sir Aylmer
Stanley. Lord


Cecil, nt. Hon. Lord H. (Ox. Univ.)
Iliffe, Sir Edward M.
Starmer, Sir Charles


Chadwick, Sir Robert Burton
Inskip, Sir Thomas Walker H,
Steel, Samuel Strang


Chapman, Sir S.
Jackson, Lieut.-Colonel Hon. F. S.
Stuart, Hon. J. (Moray and Nairn)


Clayton, G. C.
James, Lieut.-Colonel Hon. Cuthbert
Sueter, Rear-Admiral Murray Fraser


Cobb, Sir Cyril
Jephcott, A. R.
Sykes, Major-Gen. Sir Frederick H.


Cockerill, Brigadier-General G. K.
Joynson-Hicks, Rt. Hon. Sir William
Thomson, Sir W.Mitchell-(Croydon,S.)


Colfox, Major Wm. Phillips
Kay, Sir R. Newbald
Tryon, Rt. Hon. George Clement


Conway, Sir W. Martin
Kenyon, Barnet
Vaughan-Morgan, Col. K. P.


Cope, Major William
Kindersley, Major G. M.
Waddington, R.


Craig, Captain C. C. (Antrim, South)
King, Captain Henry Douglas
Ward, Lt.-Col. A.L.(Kingston-on-Hull)


Craik, Rt. Hon. Sir Henry
Lamb, J. Q.
Warrender, Sir Victor


Croft, Brigadier-General Sir H.
Lane-Fox, George R.
Wells, S. R.


Crooke, J. Smedley (Deritend)
Leigh, Sir John (Clapham)
Weston, John Wakefield


Curzon, Captain Viscount
Linfield, F. C.
Wheler, Lieut.-Col. Granville C. H.


Dalkeith, Earl of
Locker-Lampson, G. (Wood Green)
Williams, Col. P. (Middlesbrough, E.)


Davidson, Major-General Sir J. H.
Lord, Walter Greaves
Wilson, Sir C. H. (Leeds, Central)


Davies, Alfred Thomas (Lincoln)
Lorimer, H. D.
Windsor-dive, Lieut.-Colonel George


Davies, Sir Thomas (Cirencester)
Lumley, L. R.
Wise, Sir Fredric


Deans, Richard Storry
MacDonald, R.
Wolmer, Viscount


Dodds, S. R.
McNeill, Rt. Hon. Ronald John
Wood, Major Rt. Hon. Edward F. L.


Doyle, Sir N. Grattan
Makins, Brigadier-General E.
Wood, Sir H. K. (Woolwich, West)


Dunnico, H.
Marks, Sir George Croydon
Wragg. Herbert


Eden, Captain Anthony
Marriott, Sir J. A. R.
Yate, Colonel Sir Charles Edward


Edwards, John H. (Accrington)
Meller, R. J.
Yerburgh, Major Robert D. T.


Elliot, Walter E.
Mitchell, W. F. (Saffron Walden)



Elveden, Viscount
Morrison-Bell,Major Sir A. C.(Honiton)
TELLERS FOR THE AYES.—


Erskine, James Malcolm Monteith
Muir, Ramsay (Rochdale)
Mr. Rawlinson and Sir Philip Pilditch.


Eyres-Monsell, Com. Rt. Hon. B. M.
Nall, Lieut.-Colonel Sir Joseph



NOES.


Ackroyd, T. R.
Harris, Percy A.
Phillipps, Vivian


Acland, Rt. Hon. Francis Dyke
Hartshorn, Rt. Hon. Vernon
Ponsonby, Arthur


Adamson, Rt. Hon. William
Hastings, Sir Patrick
Potts, John S.


Adamson, W. M. (Staff., Cannock)
Hastings, Somerville (Reading)
Pringle, W. M. R.


Alden, Percy
Haycock, A. W.
Raffety, F. W.


Alexander, A. V. (Sheffield, Hillsbro')
Hayday, Arthur
Ramage, Captain Cecil Beresford


Alstead, R.
Hayes, John Henry
Rathbone, Hugh H.


Ammon, Charles George
Hemmerde, E. G.
Raynes, W. R.


Aske, Sir Robert William
Henderson, Rt. Hon. A. (Burnley)
Rea, W. Russell


Attlee, Major Clement R.
Henderson, A. (Cardiff, South)
Rees. Sir Beddoe


Baker, Walter
Henderson, T. (Glasgow)
Rendall, A.


Barclay, R. Noton
Henderson, W. W. (Middlesex,Enfld.)
Richards, R.


Barker, G. (Monmouth, Abertillery)
Hillary, A. E.
Richardson, R. (Houghton-le-Spring)


Barnes, A.
Hindle, F.
Ritson, J.


Batey, Joseph
Hirst, G. H.
Roberts, Rt. Hon. F. O.(W.Bromwich)


Benn, Captain Wedgwood (Leith)
Hodge. Lieut.-Col. J. P. (Preston)
Robertson, J. (Lanark, Bothwell)


Birkett, W. N.
Hodges, Frank
Robertson, T. A.


Black, J. W.
Howard, Hon. G. (Bedford, Luton)
Robinson, S. W. (Essex, Chelmsford)


Bondfield, Margaret
Hudson, J. H.
Robinson, W. E. (Burslem)


Bonwick, A.
Isaacs, G. A.
Romeril, H. G.


Bowerman, Rt. Hon. Charles W.
Jackson, R. F. (Ipswich)
Rose, Frank H.


Bramsdon, Sir Thomas
Jenkins, W. (Glamorgan, Neath)
Royle, C.


Briant, Frank
Jewson, Dorothea
Rudkin, Lieut.-Colonel C. M. C.


Broad, F. A.
John, William (Rhondda, West)
Scrymgeour, E.


Bromfield, William
Johnston, Thomas (Stirling)
Scurr, John


Brown, A. E. (Warwick, Rugby)
Jones, C. Sydney (Liverpool,W.Derby)
Seely, H. M. (Norfolk, Eastern)


Brown, James (Ayr and Bute)
Jones, Henry Haydn (Merioneth)
Sexton, James


Brunner, Sir J.
Jones, Rt, Hon. Leif (Camborne)
Shaw. Rt. Hon. Thomas (Preston)


Buckle, J.
Jones, T. I. Mardy (Pontypridd)
Sherwood, George Henry


Buxton, Rt. Hon. Noel
Jowett, Rt. Hon. F. W. (Bradford,E.)
Shinwell, Emanuel


Cape, Thomas
Jowitt, W. A. (The Hartlepools)
Short, Alfred (Wednesbury)


Chapple, Dr. William A.
Kedward, R. M.
Simon, E. D. (Manchester,Withingtn.)


Charleton, H. C.
Keens, T.
Sinclair, Major Sir A. (Caithness)


Church, Major A. G.
Kenworthy, Lt.-Com. Hon. Joseph M.
Smillie, Robert


Clarke, A.
Kirkwood, D.
Smith, Ben (Bermondsey, Rotherhithe)


Climie, R.
Lambert, Rt. Hon. George
Smith, T. (Pontefract)


Collins, Sir Godfrey (Greenock)
Lansbury, George
Smith, W. R. (Norwich)


Compton, Joseph
Laverack, F. J.
Snell, Harry


Cove, W. G.
Law, A.
Snowden. Rt. Hon. Philip


Cowan, D. M. (Scottish Universities)
Lawrence, Susan (East Ham, North)
Spence, R.


Crittall, V. G.
Lawson, John James
Spencer, George A. (Broxtowe)


Darbishire, C. W.
Leach, W.
Spencer, H. H. (Bradford. S.)


Davies, David (Montgomery)
Lee, F.
Spero, Dr. G. E.


Davies, Ellis (Denbigh, Denbigh)
Livingstone, A. M.
Stamford, T. W.


Davies, Rhys John (Westhoughton)
Lowth, T.
Stephen, Campbell


Davison, J. E. (Smethwick)
Lunn, William
Stewart, J. (St. Rollox)


Dickson, T.
McCrae, Sir George
Stranger, Innes Harold


Dudgeon, Mayor C. R.
McEntee, V. L.
Sturrock, J. Leng


Dukes. C.
Mackinder, W.
Sullivan, J.


Duncan, C.
Maclean, Nell (Glasgow, Govan)
Sunlight, J.


Dunn, J. Freeman
Macnamara, Rt. Hon. Dr. T. J.
Sutherland, Rt. Hon. Sir William


Edwards, C. (Monmouth, Bedwellty)
Maden, H.
Sutton, J. E.


Edwards, G. (Norfolk, Southern)
Mansel, Sir Courtenay
Tattersall, J. L.


Egan, W. H.
March, S.
Terrington, Lady


Emlyn-Jones. J. E. (Dorset, N.)
Marley, James
Thomas, Rt. Hon. James H. (Derby)


England, Colonel A.
Martin, F. (Aberd'n & Kincardine, E.)
Thomson, Trevelyan (Middlesbro, W.)


Falconer, J.
Martin, W. H. (Dumbarton)
Thorne, G. R. (Wolverhampton, E)


Foot, Isaac
Maxton, James
Thorne, W. (West Ham, Plaistow)


Franklin, L. B.
Meyler, Lieut.-Colonel H. M.
Thornton, Maxwell R.


Gardner, B. W. (West Ham, Upton)
Middleton, G.
Thurtle, E.


Gardner, J. P. (Hammersmith, North)
Millar, J. D.
Tillett, Benjamin


Gavan-Duffy, Thomas
Mitchell, R.M.(Perth & Kinross,Perth)
Tinker, John Joseph


George, Major G. L. (Pembroke)
Montague, Frederick
Tout, W. J.


Gibbins, Joseph
Morel, E. D.
Trevelyan, Rt. Hon. C. P.


Gilbert, James Daniel
Morrison, Herbert (Hackney, South)
Turner, Ben


Gillett, George M.
Morrison, R. C. (Tottenham, N.)
Varley, Frank B.


Gosling, Harry
Morse, W. E.
Viant, S. P.


Graham, D. M. (Lanark, Hamilton)
Moulton, Major Fletcher
Vivian, H.


Graham, W. (Edinburgh, Central)
Muir, John W.
Wallhead, Richard C.


Greenall, T.
Murray, Robert
Ward, G. (Leicester, Bosworth)


Greenwood, A. (Nelson and Colne)
Naylor, T. E.
Ward, Col. J. (Stoke upon Trent)


Grenfell, D. R. (Glamorgan)
Nichol, Robert
Watson, W. M. (Dunfermline)


Griffiths, T. (Monmouth, Pontypool)
Nixon, H.
Watts-Morgan, Lt-Col. D. (Rhondda)


Groves, T.
O'Grady, Captain James
Webb, Lieut.-Col. Sir H. (Cardiff, E.)


Grundy, T. W.
Oliver, George Harold
Webb, Rt. Hon. Sidney


Guest, J. (York, Hemsworth)
Oliver, P. M. (Manchester, Blackley)
Wedgwood, Col. Rt. Hon. Josiah C.


Guest, Dr. L. Haden (Southwark, N.)
Owen, Major G.
Welsh, J. C.


Hall, F. (York, W. R., Normanton)
Paling, W.
Westwood, J.


Hall, G. H. (Merthyr Tydvil)
Palmer, E. T.
Wheatley, Rt. Hon. J.


Hamilton, Sir R. (Orkney & Shetland)
Pattinson, S. (Horncastle)
Whiteley, W.


Hardie, George D.
Perry, S. F.
Wignall, James


Harris, John (Hackney, North)
Pethick-Lawrence, F. W.
Williams, A. (York, W. R., Sowerby)




Williams, Dr. J. H. (Llanelly)
Wilson, R. J. (Jarrow)



Williams, Lt-Col. T.S.B.(Kenningtn.)
Windsor, Walter
TELLERS FOR THE NOES.—


Williams, T. (York, Don Valley)
Wintringham, Margaret
Mr. Allen Parkinson and Mr. Warne.


Willison, H.
Woodwark, Lieut.-Colonel G. G.



Wilson, C. H. (Sheffield, Attercliffe)
Wright, W.

Mr. SPEAKER: The next new Clause (Amendment of 10 and 11 Geo. V, cap. 18), in the name of the hon. and gallant Member for Wolverhampton, Bilston (Lieut.-Colonel Howard-Bury), and other hon. Members is not in order here.

NEW CLAUSE.—(Alteration of basis of assessment for Schedule E.)

Such of the provisions of the Income Tax Acts as provide that tax under Schedule E shall be computed by reference to the year of assessment shall, in any cases where the person assessed so desires, cease to have effect, and in such cases the basis of such assessment shall be the income of the year preceding the year of assessment.—[Sir Henry Buckingham.]

Brought up, and read the First time.

Sir HENRY BUCKINGHAM: I beg to move, "That the Clause be read a Second time."
I have another Clause on the Paper dealing with an alteration of the basis of assessment for Schedule D, and, although I shall propose, with the permission of the House, later on to withdraw both my Clauses, I wish first to have an opportunity of saying a few words with regard to them. They cover a very large subject, and I am perfectly conscious of the fact that, as they appear on the Paper, they are not altogether practicable from the taxing authorities' point of view. But, owing to the danger of the Clauses being ruled out, acting on the best advice I could obtain, I included certain words to provide the taxpayer with an alternative choice of methods under which he should be taxed. With my experience of Income Tax administration, I am quite conscious that any such suggestion is quite impracticable. The meaning of the second Clause which stands in my name is that the three years' average should be abolished, and that the assessment of Income Tax under Schedule D should be made on the preceding year's profits.
I am quite aware that the few words in which I have described such a suggestion in the proposed Clause would not be at all sufficient to make that suggestion practicable. Still the Royal Commission in 1920 was very much in favour of the alteration, and they reported that the chief benefits
they saw in taking the preceding year's profits as the basis of liability under Schedule D were (a) that it would make the amount of profit assessed correspond more closely in point of time with the amount of profit actually earned, (b) that it would be a very important step in the direction of uniformity, and (c) that it seemed to be the universal desire. "Therefore," say the Commission, "we have no hesitation in recommending that the change be made." I do not think I can add very much to those suggestions of the Royal Commission, but I should like to say in regard to the first of the three—that the alteration would make the profits assessed correspond more closely in point of time to the amount of profit actually made—that we all know that the larger and better organised businesses are able to so arrange their assets that the demand for Income Tax based on the three years' average does not cause any hardship. But the great majority of smaller businesses in this country have to depend for payment of Income Tax on the profits they are actually making and handling at the time the Income Tax is due, and I venture to suggest that that may be one of the reasons why so much Income Tax is now in arrear. If a small trader has to pay on an average which may be larger than his actual amount of profit in the previous year he may be unable to raise the necessary money, and I venture to suggest there is very great hardship on these people and that the alteration of the basis of taxation from the three years' average to the profits of the year preceding the year of assessment would help them very much. It would also enable the Income Tax authorities to collect the money much more easily.
I know perfectly well there are many difficulties in the way of carrying out this suggestion, and I am not quite satisfied that the desire for the change is universal. There are many cases which fall under various rules in Schedule D which require very close examination in order to avoid the hardship that may arise, for example, from the possibility of a large loss being made in one year which at present is spread over the three years. There are various other things I could mention to
the House, but I suggest, with all due deference to the House, that it is not quite the proper assembly to deal with the details of such a far-reaching change. I am going to ask that both as regards Schedule D and Schedule E the Chancellor of the Exchequer will be good enough to appoint a Committee, consisting of Treasury officials and others versed in Income Tax administration, and also in mercantile pursuits, to go into this very large question which I am raising and only just slightly touching upon this after- noon. I also propose to ask that if such a Committee is appointed it shall inquire into the question of Schedule E assessments also. Although the Royal Commission formed a different opinion as to the correct method of assessment for Income Tax under Schedule E as compared with Schedule D they said that in their opinion the method of assessing Income Tax under the latter Schedule on the actual year of assessment was ideal. That is just exactly the opposite to what they said about Income Tax assessment under Schedule D.
The ideal does not carry us far, and I think I am right in saying that the Treasury officials have found it anything but ideal in practice, for it is obviously impossible to correctly assess in advance the amount of salaries and commissions of a varying character, as salaries may rise or fall and commissions are always variable. It is impossible for any man to return, at the beginning of the year, the amount of salary or commission he is going to be paid during that year. I think the Financial Secretary will agree that the practice has utterly failed, and I am inclined to think that the suggestion I am putting before the House will be welcomed by the Inland Revenue Authority, as the present method leads to an enormous amount of labour and expense in consequence of the necessity of making very large numbers of additional assessments or allowances. I do not wish to press the point on the House now, but, having made it, I hope the Chancellor of the Exchequer will see his way to agree that a Committee shall be formed to inquire into this very big question, not only from the taxpayers' point of view but from the Treasury point of view as well, because the continuity and equality of revenue derived from income tax is very necessary
from the Treasury point of view. Therefore, it is just possible that the change from the three years' average to one year's profits might, in the opinion of this Committee, be found to be of too unequal a character, and result in a revenue not sufficiently stable. I am inclined to think that will not he so, because seven-tenths of the Income Tax is derived from more or less stable sources. All those, however, are matters for debate. I think I have foreshadowed some of the difficulties which must arise, and all I ask is that I may be allowed to withdraw these Clauses, but, before doing so, I hope the Financial Secretary will he good enough to say whether my suggestion is acceptable to the Treasury.

Mr. HANNON: I beg to second the Motion.

Mr. GRAHAM: As the hon. Member has dealt with these two new Clauses together, I will reply to both at the same time, because the hon. Member has indicated to the House that he does not intend to press these Clauses, and, accordingly, hon. Members will not expect a detailed reply. As regards Schedule E, the first new Clause standing in the name of the hon. Member suggests that we should alter the present foundation of the year of assessment to the income of the year preceding the year of assessment. As regards Schedule D, which deals with ordinary business profits of commercial and other undertakings, it is suggested that we should alter the present practice on the application of the person assessed to the income of the year preceding the year of assessment. That is the hon. Member's proposal. I need not say that all these proposals were very carefully considered by the Royal Commission.
As regards the suggestion which is made under Schedule E, it would be wrong if I held out any prospect of the change being made from the year of assessment to the year preceding. There is not a great difference from an administrative point of view, but it is important to keep as near as possible to the year in which the profits are being made. I imagine that what the hon. Member has in mind is that there is something of a fluctuating character in the method of assessment, but in case of fluctuation we take the basis of the pre-
ceding year. I hope that goes a very long way to meet any case of hardship.
The problem as regards the hon. Member's second new Clause is more important, because it involves the substitution of the preceding year for the three years' average. I know there are differences of opinion on that point. As a member of the Royal Commission on Income Tax in 1919 I was very much impressed by the fact that practically no evidence was submitted in favour of the three years' average. When we have a three years' average, we get away from the time the profits are being actually made, and we land ourselves in certain administrative difficulties, and this contributes to the accumulation of arrears which we all want to see kept down. The case for the three years' average is on account of the fluctuations from year to year, and it also enables the Exchequer to estimate more closely what the revenue will be year by year.
My own opinion is entirely in favour of the year of assessment, but I know many hon. Members take another view. I do not need to argue the case further, because later on I hope there will be an opportunity of considering this question. I know that on a former occasion this point was raised by the right hon. Gentleman the Member for Hillhead (Sir R. Horne) who said that at a time of financial dislocation and industrial distress, it might be a little hard to make a change of this kind.
As regards the appointment of a Committee, I feel that this House has had a very liberal dose of Committees up to the present time. The matter was inquired into at great length by the Royal Commission. The facts are probably familiar to hon. Members, and I know they are very familiar to the Inland Revenue and Treasury authorities. I do not think an inquiry by a Committee is required, but I may say that I do not think that any change would be introduced without consultation with hon. Members who are interested, and I imagine that would meet the situation. I do not think the hon. Member who moved this new Clause will dispute what I have said in regard to the situation, and I should think this matter will came up for decision probably next year or the year after.

Sir H. BUCKINGHAM: I am much obliged for the reply which has been given by the Financial Secretary, and for the information which he has given me, and the promise that the consideration of this very important change will come before the authorities at the Treasury before this time next year. The hon. Member also said that the appointment of a Committee was unnecessary. In view of the evidence given before the Royal Commission and the decision they arrived at, this may be so, but I hope this matter will be considered very shortly, and that the Government will take into consultation such hon. Members of this House, and those outside, this House, as may be helpful in coming to a conclusion on this important matter. I wish to refer to one other point about Schedule E Assessments—

Mr. SPEAKER: I thought that the hon. Member got up to withdraw his Motion. He is not allowed to make a second speech.

Sir H. BUCKINGHAM: Then I ask leave to withdraw my Motion.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Amendment of First Schedule to 8 and 9 Geo. V, c. 40.)

Rule 13 of the General Rules applicable to Schedules A, B, C, and E, shall be amended by the addition at the end thereof of the following proviso:—
Provided that the person who is chargeable in respect of an incapacitated person, or in whose name a non-resident person is chargeable, shall not, in the absence of his being party to fraud or collusion, be personally liable for sums chargeable against such non-resident person unless and until notice shall have been given to him by the Commissioners that he will he held personally liable for sums chargeable against such non-resident person in respect of profits or gains arising after the giving of such notice.—[Mr. D. Herbert.]

Brought up, and read the First time.

Mr. HERBERT: I beg to move "That the Clause be read a Second time."
I hope it will not be necessary for me to make a long speech in introducing this new Clause, because the matter with which it deals was debated at considerable length in Committee, and it is totally different from the new Clause which was proposed in Committee. It is drawn with
the intention of meeting the objections which were made by the Financial Secretary to the Treasury to the Amendment which was moved in Committee. May I first of all read Rule 13 of the general Rules, which provides that
The person who is chargeable in respect of an incapacitated person or in whose name a non-resident is chargeable shall be answerable for all matters required to be done under this Act for the purposes of assessment and the payment of the tax.
Our one quarrel in regard to that rule is that where a foreigner who cannot be got at has to be charged such revenue, in order to be able to get the money in the name of an agent you may be, if you make that agent personally liable, unjustly and unfairly making him liable to pay money which he never can recover, and although there may be cases of dishonest agents, there may be the case of the man who would be willing to do what he could, and has been carrying on a legitimate and bone fide business, and finds himself landed with a personal liability in respect of alleged profits of which he knows nothing and of which he cannot possibly know anything, and which he cannot recover. The Amendment which I ask the Government to accept is to add to Rule 13 the proviso contained in the new Clause I have proposed. The Financial Secretary, in replying to the Debate on the other Amendments in Committee, expressed the view that the Government was naturally anxious to do everything to encourage legitimate agencies and facilitate the volume of trade depending upon them. The answer which he gave was to this effect:
If in fact we have no recourse against an agent in this country, then against whom have we recourse?
We say by all means make the foreigner chargeable in the name of the agent, and make the agent personally liable, but do not make him personally liable unless and until you have given him notice that you intend to do so, and then only in respect of sums chargeable after that date. The reason is that the agent, having got the notice, generally takes one of two courses. He either says, "This is too dangerous, and I will not go on with the business," or he goes to his foreign principals and says, "I am to be held liable for certain taxation chargeable upon you. Therefore, if I am to continue to do this business for you, I must
have a definite understanding and a definite arrangement with you that such sums for which I am made personally liable as payable by you shall be forthcoming and shall be paid by you." This proposed new Clause does two things. In the first place, it relieves the agent from personal liability unless and until he is given certain notice; and, in the second place, it preserves the right of the Government to recover the tax payable by the foreigner from and against the agent to the extent of making him personally liable, provided only that they give him notice beforehand that they intend to do so. I do most respectfully submit to the Financial Secretary that this is a very difficult request for him to answer, and I hope that, perhaps, he and the Chancellor of the Exchequer may see their way to accept this very much modified proposal, which preserves all their rights, except only that, unless there is fraud and collusion, they cannot recover against the agent until they have given him notice, which, of course, they can do the moment this Measure which we are now discussing comes into operation.
May I just say another word or two in reference to this Clause, and particularly in regard to the matters which were discussed in connection with it during the Committee stage? There stands in my name on the Paper an Amendment which has not been called, because you, Mr. Speaker, said I must choose between that one and this. I chose this one, undoubtedly, because this is one which we hope will give practical relief to the perfectly honest agent who, at the present time, fears that he may be landed with a liability which is really none of his. The other Amendment which I put down was put down, not with the intention at all of pressing it, but in the hope that the Government would make some statement of policy which might reassure people in the City with regard to certain fears which are agitating them at the present time, and which I and some of my friends are very much afraid are already leading to certain valuable business in the City of London being closed down or taken elsewhere. These foreign people who, under our law, are chargeable through their agents, if and so far as they are chargeable at all, include a very large number of people, firms or companies, of the nature of what I may describe as produce
companies—companies producing raw material—companies running sugar plantations and producing sugar, or running coffee plantations and producing coffee, or producing a number of articles of food of that kind, or, it may be, certain chemical or mineral substances, such as nitrate and so forth. Those companies probably incur the whole of their expenditure, do the whole of their work and business in merely producing those goods from the soil in a foreign country, and the only connection that they have with this country in the way of business is that the contracts for the sale of their crops are made on the London market. Possibly they are contracts for sale to foreigners, and not for sale in this country. In those circumstances—and I venture to submit to the Financial Secretary that this is a correct view of the law as it stands—that person, firm or company makes no profit in this country which is chargeable to tax. The agent who arranges the contract for them with a sugar broker or a coffee broker—he is called a produce merchant—makes a contract with a broker, who in turn makes a contract with some other wholesale merchant to sell the goods to him, and that wholesale merchant may be in Canada or anywhere else. My submission is that, under the law as it stands, no profit is, in those circumstances, made in this country which is taxable, except the profit of the agent who earns his commission. I hope the Financial Secretary will try and say whatever he can in order to prevent those foreign producing companies from taking away their entrepot trade from this country and establishing it in, say, Belgium or Holland. It is, of course, quite obvious that, if that trade is going to be driven away by a fear of taxation, this country and the national Exchequer are going to be enormous losers, and I can assure the Financial Secretary—and I know that many of my friends will back me up in this—that there is a very serious fear about that in the City at the present time, which is already having a very considerable effect. Therefore, I would ask him to accept an Amendment which will relieve the agent who is above suspicion, unless and until such agent has been given notice, and, therefore, has been given the choice of either giving up the business or making sure that he can get the money from his foreign principal, and which will
relieve a perfectly innocent person of personal responsibility. I would also invite the Financial Secretary to make some sort of statement which will relieve these producing companies, who do nothing in this country except instruct merchants who make contracts with brokers, from the fear that they will be liable to heavy taxation in this country, which would lead them to make these great brokerage contracts abroad instead of in the City of London.

Lieut.-Colonel POWNALL: I beg to second the Motion.
I shall not detain the House long, because I spoke on this matter during the Committee stage. Since last week I have been given actual cases of demands which have been made by the Inland Revenue Department on London firms, which demands came, I may say, entirely as a bolt from the blue, because it was quite clearly understood, in view of what Mr. McKenna said in 1915, when this question was discussed at some length in the House, that unless there was a suggestion of collusive or quasi collusive arrangements between the importer abroad and the agent here, these questions would not be raised, and the agent would not be held personally liable. To the best of my knowledge there is no suggestion of any collusive or quasi collusive arrangement against either or any of these firms, who have been assessed to sums amounting, in some cases, to tens of thousands of pounds. What is the position in which firms find themselves who suddenly receive these demands, directed, through them, at their principals abroad? Their principals, I imagine, are quite at liberty to say, if they wish, "We had no idea at all, when we appointed you our agents a few years ago, that we should find ourselves liable, in addition to the Income Tax we have to pay where we are domiciled, to English Income Tax, and it may be Super-tax as well," and the obvious thing for them to say is, "With taxation so high as it now is in England we should prefer to make our agency arrangements abroad, and we will terminate, as from now, or in six months' time, or whenever it may he, our arrangement with you."
The English firm loses in two ways. It remains liable for the Income Tax on the profits made by its principals abroad. It also loses the agency business which it
has been carrying on, and I do not think it is generally realised how much other business will be lost at the same time. All the shipping business, the insurance, and the financing of cargoes—all these different forms of profit will be lost to this country; and the Chancellor of the Exchequer and the Treasury will lose the Income Tax, and, it may be, Super-tax, arising therefrom. I ventured to point out last week that the actual amount of the commission business which now accrues to this country was shown in the Board of Trade figures six months ago as having reached last year a total of some £30,000,000. We want, in these days, to increase our exports in every way possible, and an invisible export of that sort is of the greatest possible value to us from the point of view of exchange and from every other point of view. I seriously suggest to the Financial Secretary that, while a strong case was made out for the previous new Clause which he could not agree to, there is an overwhelmingly strong case for this Clause, and I hope he will see his way to adopt either this Clause as it stands or some modification of it which will carry out its principles.

Sir A. SHIRLEY BENN: I rise to appeal to the Financial Secretary to allow this Clause to be adopted, and I do so because I have had personal experience of what will be the effect in the absence of such a Clause. I am heartily in favour of every foreigner who does a retail business in England being taxed, whether he is resident here or not, but the idea of taxing cost, insurance and freight cargoes in addition is going to do no end of harm. I will give the House a practical instance. For some years I was managing director of a large company which shipped cargoes from America. We had our agents here in London who sold the cargoes for us. We sold through them, and got a reasonable price for our cargoes. They did our insurance, chartered our steamers, and settled disputes, and they were very good agents. But if those agents had told us that we were to be charged Income Tax upon the business that we did abroad, we should simply have cut them off entirely, and should have sold our cargoes in foreign countries. They sold our cargoes for us to Germany, France, Italy, South Africa—in fact, all over the world. All the business came through London. It
meant that the chartering was done here and the insurance was done here. But if the Government do not adopt some Clause like this, I can assure the Financial Secretary that dozens and dozens of firms will cut off their London agents and do their business either direct or through agents in New York or somewhere else abroad. It is far more serious than I think those who have not been interested in business realise, and I hope the Financial Secretary will see his way to adopt his Clause. If he does not, and if the agents notify the shippers that their cargoes will be liable to certain taxes, the shippers will provide for that in fixing their prices. It is merely another form of protection, but that it should only be applied to cost, insurance and freight cargoes would be extremely injurious, and would do incalculable damage to our business.

8.0 P.M.

Sir J. PENNEFATHER: I do not like this Clause quite as much as I did the one that was before us during the Committee Stage, but I think that this Clause is undoubtedly an easier one for the Government to accept, because it does not go quite so far. Last week, when I spoke on this subject, I expressed the views, which I am still entitled to express, of all the great trade associations of the Port of Liverpool, and that really means far more than Liverpool—it means trade associations which operates through a very large section of the North of England. I would ask the Financial Secretary to bear in mind the fact that these people are by no means all what are called agents. Many of them are principals; they are all competitors, and they have conflicting interests of all kinds; yet, on this one point, they are all agreed that a Clause something like this should be introduced into the Finance Bill. I want to stress this again, that if the Government reject this Clause they will be rejecting something which all business men agree is absolutely required. It is a very modest proposal, very reasonable and very sensible, so much so that I do hope my hon. Friend will not find any reasons for rejecting it.

Lieut.-Colonel HODGE: I hope the Financial Secretary will not give way on this. One thing has struck me in listening to the discussion on this proposed new Clause, and that is that the speakers might have done better if they
had collaborated. The Clause itself only demands that agents should have notice. Is it not a fact that at the present time they have got notice? The hon. Member who has just sat down spoke about the cry in the North against this going on. Then why the necessity for the notice?

Sir J. PENNEFATHER: I am quite sure the hon. Member does not wish to misrepresent what I said. I think I said quite clearly that, while this might not be all that they desire, it was a step in the right direction, and was satisfactory as far as it went.

Lieut.-Colonel HODGE: I am sure the hon. Gentleman knows me sufficiently well to believe that I would not wish to misrepresent him. But how are these agents to be discovered, and from whom are they to get notice?

Mr. D. HERBERT: In the same way that they are discovered at the present time, and my hon. Friend opposite serves them with notices.

Lieut.-Colonel HODGE: Why should these gentlemen get notice in advance that they are to be responsible? They know it perfectly well at the present time.

Mr. HERBERT: No, they do not.

Lieut.-Colonel HODGE: Then I do not understand the reason for the Clause. If they do not understand that they are liable now, why do hon. Members come forward with this Clause to-day? I can well understand the difficulty the Exchequer is going to be in in trying to recover the tax if the agent is not to be held responsible for this money. We all know how slow the foreigner is in wishing to pay taxes in his own country, and if he thinks by an evasion of this sort the agent is not responsible, how is the Chancellor of the Exchequer ever to recover the huge amount of money that is bound to be involved? I hope the Financial Secretary to the Treasury will not give way on this

Mr. GRAHAM: The promoters of this Clause reminded the House of the Amendment which was discussed at some length in Committee on the Bill, and during that discussion I tried to indicate the view the Government took of the proposal before the House I am bound
to say at once that I can hardly offer a message of any great encouragement to those who have promoted, admittedly, a more moderate proposal. The hon. Member for Watford (Mr. D. Herbert) referred to a certain class of trade which does not touch these shores or only just touches these shores. On that point in Committee I read two passages from the Act of 1918. It is very difficult to say whether or not any individual ease comes within the regulation, but I had a very strong feeling during the Committee stage of this Bill that the two passages in the 1918 Act safeguarded the position under that head keeping always in view our duty to the Revenue on the other side.

Mr. D. HERBERT: I am very much obliged to the hon. Gentleman for what he says, and, if he will make it clear, I think it will assist the Revenue very considerably, if the Revenue do intend to act—I hope I am not putting this offensively—in that spirit of the Rule which he quoted the other day, because in the City they say an attempt is being made to render a non-resident person chargeable, in the name of a broker, and so on. The uneasiness which is going on is because of an idea, which I want the hon. Gentleman to say is a mistaken one, that the Revenue, apparently, are disregarding that Rule, or trying to treat it as a Rule which can be overcome

Mr. GRAHAM: I know representations to that effect have been made, but I am bound to say, while I have, not, of course, looked into any of the individual cases, my own impression was very distinctly that there were safeguards in the two passages, but I find it hard to believe that the Inland Revenue authorities are going to proceed—for that is what it amounts to—in violation of the terms of the Act of Parliament. In any case, I will undertake to look at that again, because I do not think there can be any real difference of opinion between us that these provisions certainly do afford safeguards. As regards the actual Clause before the House, I agree that, from some points of view, it is much more moderate than the proposal put forward on the last occasion. Reviewing the Debate in Committee, no hon. Members suggested that that trade should not be taxed, and I think a great many hon. Members, including those who voted against us,
admitted that we had no real remedy if the Amendment they were promoting had been incorporated in the Bill. The hon. Member for Watford on this occasion, supported by two or three other Members, makes a proposal which comes to this, that an agent here is not to become liable until he has been given notice, and is only to be liable from the time he has received that notice in respect of this trade. I am bound to agree, to a large extent, with what has been said by my hon. and gallant Friend the Member for Preston (Lieut.-Colonel Hodge), because it is true to say that this has obtained a very large measure of publicity, and I find it hard to believe that agents are not aware of a Rule which has been applied for a very long' time. This is taxable trade, and any agent engaged in it is surely bound to ask himself where the liability will lie if he undertakes the agency, keeping very clearly in view the fact that this country can have no recourse to a foreign country.
Taking another point, which I believe to be more important, it is quite conceivable that a very large part of the year might elapse before, in fact, notice was sent, but in the Clause as it stands the Exchequer would never have a remedy in this country for that part of the trade which was undertaken before the service of the notice. It would have, as this proposal stands, no recourse against the agent here, and, of course, none against the foreign principal as regards that trade which was undertaken before the serving of the notice. I say nothing about the practical difficulties which might arise in the serving of the notice by the Commissioners,

although I think that is a point which should not be forgotten by the House. I have made it perfectly plain—and I speak for my right hon. Friend also in this connection—that we have no desire whatever to interfere with legitimate agents' trade ire this country. We recognise it is a very important business, and we also know that a very large amount of British employment depends upon it, but, at the same time, we have, first of all, a clear duty to the Revenue, and, secondly, a clear duty to other British taxpayers carrying on trade who are exposed to all this burden of taxation.

My difficulty is, frankly, that of opening the door, to however small an extent, through which people are going to escape, and although this has been modified by the hon. Member, I am by no means satisfied that it would not provide a chance for abuses of the kind. This matter has been considered by the Royal Commission, or, at least, by other bodies concerned in Income Tax, and the tendency has been not to weaken this but to strengthen it, and I dare say, if I were in order, I could mention a good many suggestions which have been made with a view to tightening up this provision. In any event, my right hon. Friend feels that, in view of the protection under the Act of 1918 and of our general attitude towards agencies, there is not a case for this Clause. These agents are hound to know, or will know, of these provisions, and, with the best will in the world, I am afraid I must resist this Clause.

Question put, " That the Clause be read a Second time."

The House divided: Ayes, 96; Noes, 253.

Division No. 154.]
AYES.
[8.14 p.m.


Agg-Gardner, Rt. Hon. Sir James T.
Crooke, J. Smedley (Deritend)
Hartington, Marquess of


Barnston, Major Sir Harry
Dalkeith, Earl of
Henn, Sir Sydney H.


Beamish, T. P. H.
Davidson, Major General Sir J. H.
Herbert, Dennis (Hertford, Watford)


Benn, Sir A. S. (Plymouth, Drake)
Davies, Alfred Thomas (Lincoln)
Hillary, A. E.


Betterton, Henry B.
Davies, Sir Thomas (Cirencester)
Hope, Rt. Hon. J. F. (Sheffield, C.)


Blades, Sir George Rowland
Dawson, Sir Philip
Howard-Bury, Lieut.-Col. C. K.


Bourne, Robert Croft
Deans, Richard Storry
Hughes, Collingwood


Bowyer, Capt. G. E. W.
Doyle, Sir N. Grattan
Inskip, Sir Thomas Walker H.


Brittain, Sir Harry
Elliot, Walter E.
Jackson, Lieut.-Colonel Hon. F. S.


Buckingham, Sir H.
Eyres-Monsell, Com. Rt. Hon. B. M.
Jephcott, A. R.


Burman, J. B.
Falls, Major Sir Bertram Godfray
King, Captain Henry Douglas


Butler, Sir Geoffrey
Ferguson, H.
Lamp, J. O.


Caine, Gordon Hall
Forestler-Walker, L.
Lord, Walter Greaves-


Cayzer, Maj. Sir Herbt.R.(Prtsmth S.)
Gates, Percy
Leigh, Sir John (Clapham)


Chamberlain, Rt. Hon. N. (Ladywood)
Gibbs, Col. Rt. Hon. George Abraham
McLean, Major A.


Chapman, Sir S.
Gould, James C, (Cardiff, Central)
Makins, Brigadier-General E.


Clayton, G. C.
Greene, W. P. Crawford
Marriott, Sir J. A. R.


Cobb, Sir Cyril
Grenfell, Edward C. (City of London)
Meller, R. J.


Conway, Sir W. Martin
Hannon, Patrick Joseph Henry
Mitchell, W. F (Saffron Walden)


Cope, Major William
Harland, A.
Nail, Lieut.-Colonel Sir Joseph


Oman, Sir Charles William C.
Roberts, Samuel (Hereford, Hereford)
Thomson, F. C. (Aberdeen, South)


Ormsby-Gore, Hon. William
Ropner, Major L.
Thomson, Sir W.Mitchell-(Croydon,S.)


Pease, William Edwin
Roundell, Colonel R. F.
Tryon, Rt. Hon. George Clement


Pennefather, sir John
Russell, Alexander West (Tynemouth)
Watson, Sir F (Pudsey and Otley)


Perkins, Colonel E. K.
Samuel, A. M. (Surrey, Farnham)
Wells, S. R.


Perring, William George
Sandeman, A. Stewart
Wheler, Lieut. Col. Granville C. H.


Plelou, D. P.
Savery, S. S.
Windsor-Clive, Lieut.-Colonel George


Pownall, Lieut.-Colonel Assheton
Shepperson, E. W.
Wise, Sir Fredric


Raine, W.
Smith-Carington, Neville W.
Wragg, Herbert


Rawlinson, Rt. Hon. John Fredk. Peel
Somerville, A. A. (Windsor)
Yerburgh, Major Robert D. T.


Rawson, Alfred Cooper
Stuart, Hon. J. (Moray and Nairn)



Remer, J. R.
Sykes, Major-Gen. Sir Frederick H.
TELLERS FOR THE AYES.—


Remnant, Sir James
Thompson, Luke (Sunderland)
Captain Hacking and Major Hennessy.


NOES.


Ackroyd, T. R.
Gilbert, James Daniel
Maclean, Nell (Glasgow, Govan)


Acland, Rt. Hon. Francis Dyke
Gillett, George M.
Macpherson, Rt. Hon. James I.


Adamson, Rt. Hon. William
Gosling, Harry
Maden, H.


Adamson, W. M. (Staff., Cannock)
Gould, Frederick (Somerset, Frome)
Mansel, Sir Courtenay


Alden, Percy
Graham, D. M. (Lanark, Hamilton)
March, S.


Alexander, A. V. (Sheffield, Hillsbro')
Graham, W. (Edinburgh, Central)
Marks, Sir George Croydon


Alstead, R.
Greenall, T.
Martin, F. (Aberd'n & Kincardine, E.)


Ammon, Charles George
Greenwood, A. (Nelson and Colne)
Martin, W. H. (Dumbarton)


Aske, sir Robert William
Grenfell, D. R. (Glamorgan)
Maxton, James


Attlee, Major clement R.
Griffiths, T. (Monmouth, Pontypool)
Middleton, G.


Ayles, W. H.
Groves, T.
Millar, J. D.


Baker, Walter
Grundy, T. W.
Mitchell, R.M.(Perth & Kinross,Perth)


Banton, G.
Guest, J. (York, Hemsworth)
Montaque, Frederick


Barclay, R. Noton
Hall, F. (York, W. R., Normanton)
Morel, E. D.


Barker, G. (Monmouth, Abertillery)
Hall, G. H. (Merthyr Tydvil)
Morrison, Herbert (Hackney, South)


Barnes, A.
Hamilton, Sir R. (Orkney & Shetland)
Morrison, R. C. (Tottenham, N.)


Batey, Joseph
Harbord, Arthur
Morse, W. E.


Birkett, W. N.
Hardle, George D.
Moulton, Major Fletcher


Black, J. W.
Harris, John (Hackney, North)
Muir, John W.


Bondfield, Margaret
Harris, Percy A.
Muir, Ramsay (Rochdale)


Bonwick, A.
Hartshorn, Rt. Hon. Vernon
Murray, Robert


Bramsdon, Sir Thomas
Harvey, T. E. (Dewsbury)
Nichol, Robert


Briant, Frank
Hastings, Sir Patrick
Nixon, H.


Broad, F. A.
Hastings, Somerville (Reading)
O'Grady, Captain James


Bromfield, William
Haycock, A. W.
Oliver, George Harold


Brown, A. E. (Warwick, Rugby)
Hayday, Arthur
Oliver, P. M. (Manchester, Blackley)


Brown, James (Ayr and Bute)
Hayes, John Henry
Owen, Major G.


Brunner, Sir J.
Henderson, Rt. Hon. A. (Burnley)
Paling, W.


Buckle, J.
Henderson, A. (Cardiff, South)
Palmer, E. T.


Buxton, Rt. Hon. Noel
Henderson, T. (Glasgow)
Pattinson, S. (Horncastle)


Cape, Thomas
Henderson, W. W. (Middlesex,Enfld.)
Perry, S. F.


Charleton, H. C.
Hindle, F.
Pethick-Lawrence, F. W.


Church, Major A. G.
Hirst, G. H.
Phillipps, Vivian


Clarke, A.
Hobhouse, A. L.
Potts, John S.


Climie, R.
Hodge, Lieut.-Col. J. P. (Preston)
Raffety, F. W.


Cluse, W. S.
Hodges, Frank
Ramage, Captain Cecil Beresford


Clynes, Rt. Hon. John R.
Hoffman, P. C.
Raynes, W. R.


Compton, Joseph
Hogbin, Henry Cairns
Rea, W. Russell


Cove, W. G.
Hore-Belisha, Major Leslie
Rees, Sir Beddoe


Cowan, D. M. (Scottish Universities)
Isaacs, G. A.
Rees, Capt. J. T. (Devon, Barnstaple)


Crittall, V. G.
Jackson, R. F. (Ipswich)
Richards, R.


Darbishire, C. W.
Jenkins, W. (Glamorgan, Neath)
Richardson, R. (Houghton-le-Spring)


Davies, David (Montgomery)
Jewson, Dorothea
Ritson, J.


Davies, Ellis (Denbigh, Denbigh)
John, William (Rhondda, West)
Roberts, Rt. Hon. F. O.(W.Bromwich)


Davies, Evan (Ebbw Vale)
Johnston, Thomas (Stirling)
Robinson, S W. (Essex, Chelmsford)


Davies, Rhys John (Westhoughton)
Jones, C. Sydney (Liverpool,W.Derby)
Robinson, Sir T. (Lancs., Stretford)


Davison, J. E. (Smethwick)
Jones, Henry Haydn (Merioneth)
Robinson, W. E. (Burslem)


Dickson, T.
Jones, Rt. Hon. Leif (Camborne)
Romeril, H. G.


Dodds, S. R.
Jones, T. I. Mardy (Pontypridd)
Royle, C.


Duckworth, John
Jowett, Rt. Hon. F. W. (Bradford, E.)
Rudkin, Lieut.-Colonel C. M. C.


Dudgeon, Major C. R.
Jowitt, W. A. (The Hartlepools)
Scrymgeour, E.


Dukes, C.
Kay, Sir R. Newbald
Scurr, John


Duncan, C.
Kedward, R. M.
Seely, H. M. (Norfolk, Eastern)


Dunn, J. Freeman
Kenworthy, Lt.-Com. Hon. Joseph M.
Sexton, James


Dunnico, H.
Kenyon, Barnet
Shaw, Rt. Hon. Thomas (Preston)


Edwards, C. (Monmouth, Bedwellty)
Kirkwood, D.
Sherwood, George Henry


Edwards, G. (Norfolk, Southern)
Lansbury, George
Shinwell, Emanuel


Edwards, John H, (Accrington)
Laverack, F. J.
Short, Alfred (Wednesbury)


Egan, W. H.
Law, A.
Simon, E. D. (Manchester, Withingtn.)


Emlyn-Jones, J. E. (Dorset, N.)
Lawrence, Susan (East Ham, North)
Simpson, J. Hope


England, Colonel A.
Leach, W.
Sinclair, Major Sir A. (Caithness)


Falconer, J.
Lee, F.
Smillie, Robert


Foot, Isaac
Livingstone, A. M.
Smith, Ben (Bermondsey, Rotherhithe)


Gardner, B. W. (West Ham. Upton)
Lowth, T.
Smith, T. (Pontefract)


Gavan-Duffy, Thomas
Lunn, William
Smith, W. R. (Norwich)


George, Major G. L. (Pembroke)
McEntee, V. L.
Snell, Harry


Gibbins, Joseph
Mackinder, W.
Snowden, Rt. Hon. Philip




Spence, R.
Thurtle, E.
Wheatley, Rt. Hon. J.


Spencer, H. H. (Bradford, South)
Tillett, Benjamin
Whiteley, W.


Spero, Dr. G. E.
Tinker, John Joseph
Wignall, James


Stamford, T. W.
Tout, W. J.
Williams, A. (York, W.R., Sowerby)


Starmer, Sir Charles
Trevelyan, Rt. Hon. C. P.
Williams, Dr. J. H. (Llanelly)


Stephen, Campbell
Turner, Ben
Williams, Col. P. (Middlesbrough, E.)


Stewart, J. (St. Rollox)
Varley, Frank B.
Williams, Lt.-Col. T.S.B.(Kenningtn.)


Stranger, Innes Harold
Viant, S. P.
Williams, T. (York, Don Valley)


Sturrock, J. Leng
Vivian, H.
Willison, H.


Sullivan, J.
Wallhead, Richard C.
Wilson, C. H. (Sheffield, Attercliffe)


Sunlight, J.
Ward, G. (Leicester, Bosworth)
Windsor, Walter


Sutherland, Rt. Hon. Sir William
Ward, Col. J. (Stoke upon Trent)
Wintringham, Margaret


Sutton, J.E.
Warne, G.H.
Woodwark, Lieut.-Colonel G. G.


Tattersall, J. L.
Watson, W. M. (Dunfermline)
Wright, W.


Thomas, Rt. Hon. James H. (Derby)
Watts-Morgan, Lt.-Cot. D. (Rhondda)



Thomas, Sir Robert John (Anglesey)
Webb, Lieut.-Col. Sir H. (Cardiff, E.)
TELLERS FOR THE NOES—


Thomson, Trevelyan (Middlesbro, W.)
Webb, Rt. Hon. Sidney
Mr. John Robertson and Mr. Allen Parkinson.


Thorne, G. R. (Wolverhampton, E.)
Welsh,J. C.



Thornton, Maxwell R.
Westwood, J.



Question, "That the Clause be read a Second time," put, and agreed to.

NEW CLAusE.—(Deductions of Income Tax allowances from Super-tax.)

In estimating the income of the previous year for the purpose of assessment to Supertax there shall be deducted the like sum as, under Section sixteen of the Finance Act, 1920 (as amended by this Act), shall have been allowed or shall be allowable in the case of earned income for the purpose of ascertaining the assessable income of the taxpayer for the purpose of Income Tax for such previous year, and the like deductions as, under or by virtue of Sections seventeen to twenty-three, both inclusive, of the Finance Act, 1920 (as amended by this Act), shall have been made, or shall be allowable, from the assessable income of the taxpayer for the purpose of Income Tax for such previous year.—[Lieut.-Colonel Pownall.]

Brought up, and read the First time.

Lieut.-Colonel POWNALL: I beg to move, "That the Clause be read a Second time."
I know mercy cannot be expected for the Super-tax payer, but I am here to plead for a small measure of justice for the Super-tax payer which at present he does not get. While the great majority of our taxes have been reduced in the last four or five years, the Super-tax, which was increased by Is 3d. in 1920, still stands at a higher figure than it did at any time during the War, and is now 6s in the £in addition, of course, to Income Tax. I have heard from the benches opposite the plea that reduction of Income Tax benefits the rich man unduly. Many people forget that owing to the Super-tax having been increased by, it so happens, the same 1s. 6d. by which Income Tax was reduced, the very wealthy—I regret that I am not one of them—are now paying just as much as they were doing five years ago before Income Tax was reduced. My plea is that those allowances which are given in respect of Income Tax, the allowances for wife and
children, should also be given in regard to Super-tax. To all intents and purposes Income Tax and Super-tax are the same. It is true that for administrative reasons the Income Tax is only deducted at the rate of 4s. 6d. in the £, and Supertax is taken on the larger sums, but to all intents and purposes Income Tax and Super-tax are the same, and therefore it seems only fair that the allowances which are given in respect of Income Tax should also be given in regard to Super-tax. The rather interesting point comes out with regard to this that Section 15 (4) of the Finance Act, 1920, enacts that in calculating Super-tax the one-tenth of earned income which is allowed in the case of Income Tax should not be a deduction from the point of view of Super-tax, and yet although this deduction is automatically barred there is no provision made that a reduction shall not be given in respect of family allowance, wife allowance, or children allowance, and therefore I contend that those allowances, which are not statutorily barred, as are, I agree, the allowances given for earned income, ought to be exempt from the Super-tax point of view. I do not think this Clause, if it were confined only to the family allowance, would run into a very considerable sum and Lord Wrenbury, who first raised this question, had a letter in "The Times" three years ago, and made out a very strong case indeed for this allowance being granted. Since then there have been legal proceedings, and the Judges have found that the law as it now stands can only be granted in respect of Income Tax. It seems to me grossly unfair that that should be the case, and I think the unfortunate Supertax payer is deserving of this small measure of relief, and that if he is
married he should have the personal allowance of £225 and the small allowance in respect of each child.

Sir H. BUCKINGHAM: I beg to second the Motion.

Mr. GRAHAM: It is true that this has been the subject of discussion in the courts of law, and the House is aware that the decision was given against the argument that is now being submitted. My hon. and gallant Friend argues that there is some hardship in the existing position. Surely, that argument proceeds upon a misunderstanding, if not a fallacy, regarding the structure of Income Tax and Super-tax in this country. At the present time, as regards the Income Tax, there is an allowance for earned income, and there is also a family allowance. Super-tax is not something new, separate and distinct from Income Tax. It is, as the. Royal Commission pointed out, a development or continuation of Income Tax, and, accordingly, if we were to adopt this proposal, it would mean that we should give this allowance presumably in respect of Income Tax and also in respect of Super-tax. In other words, the applicant would get a double allowance in circumstances which I say without hesitation are those which would not entitle the applicant to such additional allowance, because when we pass into the realm of Super-tax we are dealing with people who have a certain ability to pay.
That is the practical and fatal objection to this new Clause. The Clause would undermine the whole system of graduation recommended by the Royal Commission in 1919. These arguments on the Finance Bill lead inevitably to the question of cost. If allowances were given as suggested on the basis of earned income allowance, together with family allowance—I suppose my hon. Friend would, if necessary, suggest separation—it would cost no less than £4,000,000 in a full financial year. At this late hour, and at this stage of our proceedings, I say at once that my right hon. Friend is not able to bear that strain and, accordingly, we must resist this Amendment.

Lieut.-Colonel POWNALL: Can the hon. Member say what it would cost if
the family allowance was given alone and the earned income allowance stood as at present?

Mr. GRAHAM: It is difficult to say offhand, but I imagine that it would be a very large part of the £4,000,000.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Amendment of s. 32 of 11 and 12 Geo. V, c. 32.)

Section thirty-two of the Finance Act, 1921 (which provides for exemption of superannuation funds from Income Tax), shall have effect as though at the end of paragraph (b) in Sub-section (3) of that Section there were added the words "or, in case of death, for their widows or children."—[Mr. Romeril.]

Brought up, and read the First time.

Mr. ROMERIL: I beg to move, "That the Clause be read a Second time."
I brought this Amendment forward on the Committee stage, and I was disappointed that it was not accepted. I am very anxious that consideration should be given to this question, and I was hopeful that the Chancellor of the Exchequer might have reconsidered the point and have decided to accept it. I recognise that he has made considerable concessions, and I am not desirous in any way of embarrassing him in his Budget, which I look upon with very great- satisfaction. I should, however, like some satisfactory assurance from him with regard to this Amendment for next year. He said something in a general way about this and certain other things.

Mr. D. HERBERT: He may be on this side next year.

Mr. ROMERIL: Whatever happens, and whoever may be the right hon. Gentleman's successor in such an event as that suggested, I have no doubt that continuity will prevail, and that the Chancellor of the Exchequer will pay attention to anything that has been said this year. The right hon. Gentleman and his colleagues may not be on the other side next year. I have confidence in anything that may be acid by the present Chancellor of the Exchequer on this occasion, and I hope he will he able to give some satisfactory statement on this matter. I do not wish to embarrass him, and I shall be satisfied if he can give me any such assurance.

Mr. MONTAGUE: I beg to second the Motion.

Mr. SNOWDEN: I am very much obliged to my hon. Friend for the tone and manner of his speech. This is one of those things which appeal to the sympathies of everybody, but the Chancellor of the Exchequer is compelled to harden his heart against appeals based simply on the ground of sympathy, and which involve very considerable financial sacrifice. The new Clause would cost a very considerable sum of money. When we discussed this matter in Committee, I pointed out that the income on the superannuation side of these benefit societies was already exempt from the payment of tax, and I also said that the cost of the acceptance of this Amendment would be about £250,000 a year. Since then I have, heard from more than one quarter very considerable surprise expressed at the magnitude of that figure, and my attention has been called to a statement that was submitted by the Commissioners of Inland Revenue to the Royal Commission on Income Tax, in which it was stated that they estimated that the exemption from Income Tax of the incomes of superannuation societies would involve a cost to the revenue of about £100,000 a year.
Quite naturally, my critics have said that if the cost of that concession, affecting a very large number of societies, with very large incomes, would cost only £100,000 a year, there surely must be some mistake in estimating the cost of this further concession at £250,000. The officials of the Inland Revenue are extremely able officials but even they are not altogether infallible, and it has turned -out that the estimate which they made in regard to the cost of the exemption from income Tax of the incomes of the superannuation branches of these Societies at £100,000 it year has been, I will not say grossly, but certainly very largely exceeded. The cast is now £750,000 a year. This new Clause is estimated to cost £250,000 a year. I have made quite a number of concessions all of which will cost money, and there are one or two Amendments still on the Paper waiting to be discussed which I shall have very great pleasure in accepting. I think the House will not expect me to make this concession. However, in satisfaction to my hon. Friend I will say that
I expect the present Government will be in office next year. Certainly if its tenure of office is commensurate with its record of work a long term of life lies before it. My hon. Friend will remember that I said in the Committee stage that there was quite a number of grievances in connection with the Income Tax, many of which would not involve very large sums of money, but that if they were removed the aggregate sum involved would be very considerable, and it might be desirable for some Chancellor of Exchequer who had a few millions to spare at some time in future to overhaul the minor provisions of Income Tax and give relief where, experience showed it to be desirable.

Mr. D. G. SOMERVILLE: Is that a pledge?

Mr. SNOWDEN: No, it is not, but if the time come—and I hope it will be very soon—when that matter will be considered, that is one of the things to which attention should be given; and, without giving a definite promise, I can assure my hon. Friend that, when we are preparing the Budget next year, if we are in a position to make concessions, I shall not overlook the point raised in the Amendment now before the House.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Amendment of Finance Act, 1922, s. 21 (1).)

Section twenty-one, Sub-section (1), of the Finance Act, 1922, shall be amended so that the words "The said reasonable part of such income" shall be substituted for the words " The said income," in line fourteen of the Sub-section.—[Mr. A. M. Samuel.]

Brought up, and read the First time.

Mr. A. M. SAMUEL: I beg to move, "That the Clause be read a Second time."
I put down this Clause as an Amendment to the twenty-first Section of the Finance Act, 1922. I was one of those who supported the insertion of the original Clause in the Act of 1922, because we thought—though I am not affected by it personally—that there should be no shirking of a proper payment of Supertax by those who ought to pay it. We, therefore, armed the Revenue with the weapon contained in this Section, but we fear that the Section may operate in a way which we did not foresee, and that it
may operate so harshly as to do a great deal of damage. For that reason I have put down this Clause, which introduces the word "reasonable," so as to make the first portion harmonise with the wording of the second portion of the Section, as it will then stand in the Statute Book.
Perhaps I had best explain, by giving an example, what we mean this New Clause to do. If a company makes, say, £100,000 in the year, out of that sum it may set aside a reasonable proportion for the purpose of extending its operations, or creating a reserve, or providing for depreciations of a reasonable kind. The rest has to be declared as profit, and becomes part of the sum upon which the members of the company have to pay Super-tax. If the company makes £100,000, and in the opinion of the directors £50,000 should be put aside for future use and not declared as dividends, then the company says that £50,000 is divisible and Super tax is to be paid by members of that company on that £50,000. The Special Commissioners may say "No, £50,000 is too little. You ought to have declared at least £60,000." The company might say then, "Very well, that is reasonable. We will pay upon £60,000." It is very much a question of opinion. But in that case the Special Commissioners have no power to assess the company for Super-tax at £60,000. They must assess it for the whole £100,000. That is not a reasonable figure. We ask that the word "reasonable" may be put in.
The right hon. Gentleman opposite may say that there have been no reported cases of hardship. I will concede that that may be true, but the Revenue ought not to put the honest company in peril of its existence by preventing the Special Commissioners from assessing the company at a reasonable amount, if there is an honest difference of opinion as to what the amount divisible ought to be. For example, suppose that this company made £100,000 profit, and the directors only divide £50,000 and its members pay Super-tax on £50,000, as the law now stands the Special Commissioners come along and say, "We assess you at £100,000, although we think £60,000 reasonable. We are bound to assess you at £100,000 because we have no power to vary the figure outside the total amount
of profits made." The result would be a thing which neither the Chancellor of the Exchequer nor the Financial Secretary to the Treasury would desire. The result would be to smash the business. Businesses do not keep money liquid. They use all their money; they put it into work.
When these Special Commissioners come along and assess the business at £100,000 because the directors have made an error of judgment, when there may be a difference of opinion only to the extent of £10,000, and call upon that company to pay on £40,000 extra, the penalty inflicted is greater than if these people had been convicted of fraud. That is really an offence against the commonwealth. It is something which would injure trade, and injure the company, anti is likely to throw men out of work. The penalty is so heavy under the Clause as it now stands that, if the directors had been brought into Court and branded as thieves or dishonest persons trying to cheat the revenue, I doubt very much whether so large a penalty would have been put upon them. I concede at once to the right hon. Gentleman who represents the Treasury that we have no recorded case of hardship, so far as I myself know, arising out of the Clause as it stands, but we who are connected with commerce and industry ought not to remain quiet, and allow to continue in existence a Clause which subjects an honestly managed business to the penalty which I have just described.

Mr. D. HERBERT: I beg to second the Motion.
The House will remember that in the Committee stage. I put down an Amendment aiming at the same object as that which my hon. Friend is seeking to secure, and I am certain that we should agree on this side to accept any alternative form of words which the Government might desire to carry out this object. In a few words I may give my reasons why I think the Government should accept this Amendment, and. I may also give a definite case illustrative of the hardships which may be inflicted by the section as it now stands. The case in which we are trying to effect a change is that in which there is a difference el opinion as to what should be distributed, and, as a result of an error of judgment on the part of the directors, there is a difference of opinion between them and the Commissioners as
to how much—always less than the whole—should be distributed. Then if a company is taxed on what the Commissioners think fair, they have to be taxed on a larger amount. It seems almost a Gilbertian proposition unless there is some very special reason for it. I have had the interest to refresh my memory of the Debate which took place with reference to this Section at the time when it was first passed. Running through the whole of that Debate, not only on the part of the then Chancellor of the Exchequer but on the part of Members on every side of the House, there was recognition that you wanted only to get at that money which was being unfairly withheld from distribution. The words spoken by the right hon. Member for Hillhead (Sir R. Horne), who was then Chancellor of the Exchequer, gave the keynote of the Debate. He said:
It is only the extreme cases that are struck at, and we do not wish to strike at any case where there may be varying opinions as to how much should be put to reserve.
With regard to the question of hardship, first of all I am entitled to say that this House ought not to wait for a case of hardship to arise before it remedies an error in its own legislation which is calculated to cause hardship. Owing to the member of a very large firm of solicitors, to whom I was referred, being ill, I am not able to quote a case as an example where this money has been actually unfairly recovered. But I am able to quote a case where there might have been a most extraordinary instance of hardship, if the Commissioners had taken a slightly different view of the case from that which they did take. I will put the case shortly. The particular company concerned was formed a year or two before this legislation was contemplated.
It was formed with a very small capital for the purpose of buying the goodwill of a very big retail industrial business of a somewhat fluctuating and slightly speculative nature. It was formed to purchase that business for no less than £250,000. The people who wanted to buy the business had not the money, and they did not dare risk borrowing it on their own liability. They formed a limited company, and then, having put up as much money as they could provide, about £100,000, they borrowed the other £150,000. The terms on which they bor-
rowed that sum were that they should repay it by instalments within a period of, I think, 12 years—whether it was 11 years or 13 years does not matter. It was calculated that if the business continued fairly regular and satisfactory, with its natural fluctuation, during the 12 years, the profits which would he derived from it during those 12 years would enable them to repay the money which had been borrowed.
That case was taken before the Commissioners who proceeded under Section 21 of the Act. I was personally concerned in it myself. Fortunately for my clients, the Commissioners took the view that it was not reasonable for them to distribute any of their profit, because they had definitely bound themselves to apply that profit in the reduction of certain capital indebtedness. There was no hardship there, because they succeeded before the Commissioners, after a long hearing, and the revenue authorities did not think fit to proceed any further in the matter. But it is an example of a case where a very great hardship might have resulted. In order to pay the instalments and the interest at the rate of 6 per cent on that borrowed money, the profits had to be somewhere in the neighbourhood of £18,000 a year. That meant that in order to repay the whole they had to earn about, £18,000 a year for 12 years. They paid, by regular annual instalments, let us say., £12,000 a year, and about £8,000 or £9,000 a year as interest during the first year next year still the £12,000 with a little less for interest; and as the years went on a little less still for interest. Therefore, if the business still went or equally successfully, by the end of the fourth or the fifth year there would be a little income which was not absolutely required for payment of the instalment and interest.
Dealing with a fluctuating business the directors could say, "Yes, but we cannot make sure that we will make the same profit next year. Therefore, that comparatively trifling sum of £1,000 or so, which is the surplus for the year, we must put aside till next year and see whether we then want it to make up a diminution of profit." I submit that it would have been perfectly reasonable for the Commissioners to have said, "Yes, we quite agree that this year you can pay nothing; you have to apply it in repaying your debts." But they might have said, "In
so far as you have got a, trifle over, and you may in future years have a rather larger trifle over, we consider that there is no excuse for your not dividing it." You cannot debar the Commissioners from giving that decision if they think it right to give it; they would be bound in the performance of their duty to say that they thought the company ought to have distributed £2,000, and that to distribute nothing was, in their opinion, not reasonable. If that had been done what would have been the result? That company would have had to pay Super-tax on about £18,000 in that year, just because they had not distributed £1,000 which the Commissioners thought they ought to have distributed.
I put that case forward as showing the kind of case that must over and over again arise where real hardship will be inflicted upon people who have had not the slightest intention of evading or avoiding or otherwise keeping out of the tax; they have been perfectly bona fide in the decision they have come to, as to how much they should or should not distribute. It is no answer to us now to say that no actual cases can be quoted or that the case which I have quoted is the only one and an unusual one. The answer to that is another question to the Chancellor of the Exchequer: How many cases have been dealt with under this Section up to the present? The Section has, in effect, only just come into operation. I do not know how many cases have been dealt with, but I think they are very few.
The Chancellor of the Exchequer will remember that there is a special procedure under this Section under which a company can produce a certificate by a chartered accountant given upon a statutory declaration by the directors of a company. I have taken the best means I could to ascertain how many cases have come forward under this Section. I have inquired from most of the very biggest and most important firms of chartered accountants in the City of London, and, as it happens, the particular case to which I have referred is the only one I can find known to some half-dozen of the biggest firms of accountants in the City. Therefore I say that genuine cases, where difficulty will arise, have not yet come forward because the Section has not been in actual operation a sufficiently long time,
but it undoubtedly will create an immense hardship which I do not think the Revenue wish to have inflicted. They do not wish to take unfairly a tax which they never could receive unless in the form of a penalty and which is chargeable, as to amount, by chance and by nothing but chance. I hope, following the indication given by the Financial Secretary during the Committee stage, the Government will give this matter their careful consideration and at least allow this Clause to get a Second Reading, or, with the permission of Mr. Deputy-Speaker, if they prefer the other proposed new Clause which stands in my name, they might allow that a Second Reading if the Clause now under discussion is dropped. I hope, in any case, they will go as far as they can in order to deal with this point.

9.0 P. M.

Mr. GRAHAM: When the Finance Bill was in Committee I made a promise on behalf of my right hon. Friend to see hon. Members who were interested in this matter. That promise was duly fulfilled, and I think it is a fair representation of the discussion which took place to say that we arrived substantially at agreement that the Section had only been a short time in operation, and that probably, in the absence of concrete cases of hardship, no case had been established at this, stage for its alteration. That was the position at the end of the informal discussion which took place, but it is my duty to the House to say a few words in reply to the points put by my two hon. Friends opposite. This Section was embodied in the Finance Act of 1922 after very careful consideration, and with the assistance of hon. Members opposite, for the express purpose of trying to provide a safeguard against the formation of one-man companies whose obvious object was to avoid the payment of Super-tax by holding up the distribution of a reasonable part of the profits. Under the first part of that Section there is a reference to "a reasonable part" of the profit, and that is subject to two considerations as far as the Commissioners are concerned, namely, that regard should be paid to the current needs of he business and also to the needs of the business from the point of view of development. Accordingly, we begin, as regards the early part of the Section, with that very definite consideration in our minds. When we get to the end of the
Section it is true, as hon. Members suggest, that the wording is to the effect that in the event of the Commissioners taking the view that there has not been a distribution of that reasonable part of the profit, then a company of the kind specially treated under this Act is to be liable for the whole profit, and, on the face of it, there appears to be some kind of hardship in that state of affairs.

Mr. A. M. SAMUEL: Is my hon. Friend correct in saying that the Section specifically mentions the "whole" profit?

Mr. GRAHAM: I understood that the object of my hon. Friend's Amendment was to limit the second part of the Section to "such reasonable part of the profit." I am afraid he himself has fallen into error on that point.

Mr. SAMUEL: If the hon. Member will look into my Clause and look into the Act, I think he will find that no such words as "whole income" are used, and "whole" is the word which he used.

Mr. HERBERT: I have the Section here before me, and it is really open to two different interpretations, though I have no doubt that the one which the hon. Member for Farnham (Mr. Samuels) would put upon it is probably, in law, the wrong one. The Section states that where a company
has not distributed a reasonable part of its actual income …. the Commissioners may direct that for purposes of assessment to Super-tax, the said income, etc.
I think that the words "said income" mean the company's actual income. We say it is unfair, and that the words "said income" should mean and would probably be read by a layman to mean "the said reasonable part of such income."

Mr. GRAHAM: I am obliged to my hon. Friend the Member for Watford (Mr. Herbert), for so fully confirming what I was endeavouring to say. I know this Section well, if I may say so, and I have never had the least doubt about its effects. On the face of it, is there a real hardship in that state of affairs? I think not, when we go back on the history of the Section and remember exactly what it is designed to effect. In other words, the object is to take away this kind of cloak from certain concerns and put them back in the position of a partnerships in which of course they would
be exposed to tax on the whole profits. If that be the idea behind the Section and it seems to me beyond all doubt that was the idea, then the latter part is explained and I think probably to a very large extent that is a justification of the phrase which is there introduced. Be that as it may, after the discussion that I had with my hon. Friend the Member for Farnham (Mr. Samuel) and others, it was admitted, as has been quite frankly stated in the discussion to-night, that so far we have not been able to produce any case of hardship under this Section.
It was put on the Statute Book in 1922 but did not come into operation until 1923 and prima facie there might be some kind of argument that there has not been much opportunity of getting individual cases. On the contrary, I are advised that already some hundreds of cases have been considered under this Section and no difficulty of a substantial character has emerged. That being so, I suggest to the House it would be very unwise to alter a provision the object of which commends itself to hon. Members generally, because, quite clearly we cannot open any door which will enable one-man companies to evade the payment Super-tax and get rid of a duty to the revenue involving what may be very large sums. Accordingly, I understand my hon. Friend the Mover does not desire to press this new Clause unduly to night, on the understanding which I gave him that we will have another year's experience of the working of the Section before we come, as my right hon. Friend the Chancellor indicated we would come, to this Box next year and if by that time cases have been provided, then quite clearly the House will take into consideration any modification which is required. I have no doubt in my own mind the matter will work out quite smoothly and possibly with that statement my hon. Friend the Mover will withdraw the new Clause

Mr. SAMUEL: I am content to accept the hon. Gentleman's assurance, but will he go further and say that, if next year it is found necessary to review this Clause, and if proceedings are now, or in the next few months, begun against any firm, that firm shall not be debarred from getting the benefit of any modifica-
tion that may be put into this Clause as the result of the coming year's experience?

Mr. HERBERT: May I ask whether that means that the hon. Gentleman is going to accept the invitation of my hon. Friend to promise to introduce retrospective legislation, and does he not see that his own objection to retrospective legislation ought to lead him to accept some Amendment of this kind this year?

Mr. GRAHAM: I am quite satisfied that there can be no case of hardship, and I could not give a pledge to do what the hon. Member suggests. I think the House will agree to let this Clause go out for another year, and then we earl decide what to do.

Mr. SAMUEL: On the assurance of my hon. Friend, I beg leave to withdraw the Clause.

Motion and Clause, by leave, with drawn.

NEW CLAUSE.—(Extension, of 14 of Finance Act, 1900.)

(1) All such relief as might have been given under Section fourteen of the Finance Act, 1900, as amended by subsequent enactments (hut not including Section two of the Death Duties (Killed in War) Act, 1914), in respect of the death duties payable on property passing on the death of certain persons killed in the late War shall be given in respect of the death duties payable on the death of persons, being persons to whom this Section applies, who die from wounds inflicted, accidents occurring, or disease contracted while on active service against an enemy, or on service which is of a warlike nature or which, in the opinion of the Treasury, otherwise involves the same risks as active service.

(2) The persons to whom this Section applies are the members of His Majesty's Forces who are subject either to the Naval Discipline Act or to military law, whether as officers, non-commissioned officers, or soldiers, under Part V of the Army Act, or to the Air Force Act.

(3) This Section shall apply in the case of any persons dying from any such causes aforesaid arising after the thirty-first day of August, nineteen hundred and twenty-one.—[Sir J. Marriott.]

Brought up, and read the First time.

Sir J. MARRIOTT: I big to move, "That the Clause be read a Second time."
The object of putting down this Clause is to implement an undertaking which the Chancellor of the. Exchequer
was good enough to give us in Committee, when I and my hon. and gallant Friend the Member for Ayr and Bute (Lieut.-General Sir A. Hunter-Weston) moved a Clause similar in effect to this. The object of the Clause is to extend Section 14 of the Finance Act, 1900, which was passed at the time of the South African War, and which, for the purposes of that war and within certain limits, gave to the representatives and heirs of those who died in the war exemption from Death Duties to a limited amount. That precedent was followed at the time of the Great War, and at the time of the disturbances in Ireland legislation was promoted and passed in this House to exempt from Death Duties the estates of those who fell during the Irish disturbances. But no provision was made in regard to soldiers, sailors, or airmen who, in the discharge of their duties, fell elsewhere, and the object of this new Clause is to provide a general rule which shall govern these cases wherever they may occur. The House will observe that it asks that
such relief as might have been given under Section 14 of the Finance Act, 1900, as amended by subsequent enactments …
shall be given in future to all persons
who die from wounds inflicted, accidents occurring, or disease contracted while on active service against an enemy, or on service which is of a warlike nature or which in the opinion of the Treasury, otherwise involves the same risks as active service … This Section shall apply in the case of any persons dying from any such causes aforesaid arising after the 31st day of August. 1921.
I had an opportunity on the Committee stage of explaining the reasons which led to this proposal, and the Chancellor of the Exchequer was good enough to give very sympathetic consideration to this matter.

Mr. A. M. SAMUEL: I beg to second the Motion.

Mr. SNOWDEN: The hon. Member for York (Sir J. Marriott) stated quite correctly that this Clause is the outcome of a promise which I gave during the Committee stage of the Bill. The new Clause has been agreed to between the hon. Member and myself, and I very gladly accept it

Sir J. MARRIOTT: May I thank the Chancellor of the Exchequer for his action?

Clause read a Second time, and added to the Bill.

NEW CLAUSE.—(Amendment of Rule 13, Schedule D, Cases I. and II., 8 and 9 Geo. V., c. 40.)

Rule 13 of the Rules applicable to Schedule D, Cases I and 11, of the Income Tax Act, 1918, shall be amended by the addition of the following words at the end of the Rule:—
This Rule shall also apply similarly to limited companies where one limited company holds the maximum number of shares allowed by law in one or more other limited companies."—[Mr. Hannon.]

Brought up, and read the First time.

Mr. HANNON: I beg to move, "That the Clause be read a Second time."
This Clause has been put on the Paper as the result of a unanimous Resolution arrived at at one of the quarterly meetings of the Associated British Chambers of Commerce last year. The Resolution war moved at the instance of the representative of Birmingham on the Central Council of the Associated Chambers, and is in these terms:
That the Executive Council be requested to impress upon the Government the importance of amending Rule 13 of Cases I and [I of the Rules applicable to Schedule D of the Income Tax Act, 1918, so that its provisions will apply to limited companies as well as to persons either solely or in partnership carrying on two or more distinct trades, that is to say, that where one limited company holds the maximum number of shares allowed by law in one or more subsidiary companies, the privilege of setting off or grouping the results for the purposes of Income Tax should be allowable as is already the case with regard to persons or partnerships.
I would now like to read from the Income Tax Act, 1915, the actual rule relating to Cases I and II referred to in my new Clause. It runs as follows:
A person who carries on, either solely or in partnership, two of more distinct trades the profits of which are chargeable under the rules of this Schedule, may deduct from or set off against the profits as computed under this Act in respect of one or more such trades, the loss so computed sustained in any other such trade and mar make separate statements as to each such trade.
My new Clause would ask that the same concession be made to limited companies the majority of whose shares is held by a parent company, as now applies in the
case of individuals and firms. As I under stand it, the Inland Revenue authorities at present regard the expression "persons" as including a limited company, but it has been held for the purposes of Income Tax that a limited company is a separate legal entity and, therefore, a separate person. Now it would appear, on comparing the cases of limited companies with those of individuals and firms, that on the ground of convenience it would be desirable to treat limited companies just as individual firms are treated under Rule 13. I submit to the House that where the shares of various limited companies, so far as they are allowed by law to be held by one company, those companies should be grouped in the sense of the proposed new Clause, and ought to stand together for Income Tax purposes. I think the Chancellor of the Exchequer will admit that this principle was constituted in relation to limited liability companies in respect to Corporation Profits Tax, and Excess Profits Duty. These are now, of course, things of the past so far as the collection of revenue is concerned; but I am sure the Chancellor—at least I hope so—will consider whether the principle obtained in relation to the first does not equally apply to the second case. I do not understand how any injury could be inflicted on the Inland Revenue by the adoption of the suggestion in the new Clause now submitted to the House. Individual cases may vary. Nevertheless, I think on the whole the convenience to the Inland Revenue authorities would more than repay any possible loss which might supervene from the adoption of this new Clause.
My proposal is that the assessment should be upon the whole group of companies. That would obviate claims being made for a refund of taxation under Section 34 of the Income Tax Act, 1918, except, of course, in the case of a total loss which, however, must be very exceptional. I think the. Inland Revenue authorities will be saved a great deal of time, worry and inconvenience if they act on my suggestion in the circumstances I am endeavouring to describe, rather than to have separate assessments of the companies, and having to settle each trouble as it arises. My suggestion would be an advantage to the revenue authorities and to the taxpayers of the country. I would also bring
to the notice of the Chancellor of the Exchequer that where you have various companies occupying a relationship to the parent company in which it is very difficult to deal with the individual trading profits, returns, very often, without any intention of wishing to be so, are necessarily erroneous. It is very difficult to make an accurate estimate in respect of every one of the items involved in the actual working. The price paid for goods and the sale of goods from one of these companies to the other may very often give rise to considerable differences in an aggregate statement of profit and loss. It may also be said in support of my new Clause that a taxpayer in a position of having to furnish returns for the separate companies have to carry on very often complex dealings amongst themselves, and may be tempted to adjust a relationship which will be in his own favour, and at the expense of the Revenue; whereas if the Inland Revenue Authorities are dealing with the entire group it will be a much simpler process, and will indeed obviate the possibility of what, indeed, might be fraud upon the Exchequer.
I hope the Chancellor of the Exchequer will consider this from a common-sense point of view as well as from that of the Revenue. Where there is an associated group of companies it is just that there should be a balancing of profit and loss; that they should be dealt with in the aggregate, and not as individual concerns; that the Revenue Authorities instead of treating each company as a legal entity for Income Tax purposes should deal with the group as a whole. I know how anxious the Chancellor of the Exchequer is to secure the largest possible body of revenue, naturally, from Income Tax, and people on this side of the House may occasionally say irritating things, but we have helped the right hon. Gentleman to get the full measure of revenue and further in securing that very large surplus which he expects—and I think very rightly expects—to secure from the current year. Therefore in submitting to him as I do now, with great respect, a proposal of this kind I am sure he will give to it a generous consideration which he has withheld from some other proposals.

Sir K. WOOD: I beg to second the Motion.

Mr. GRAHAM: The subject which the hon. Gentleman has introduced is a technical one, and his speech was technical, but I think the matter is quite capable of simple explanation. My hon. Friend comes along to-night with a proposal which, he says, would extend the arrangement at present existing, and as suggested by his proposed new Clause. The condition is that the one company shall hold a maximum number of shares in another company. I think I can summarise the reply which almost any Government would give to this part under two or three very simple heads. In the first place, it is perfectly clear that the proposal of my hon. Friend would run counter to the whole of company law in this country. I imagine that the Committee know that before a Clause of this kind could be operative for revenue purposes, there would have to be substantial changes in the company law of this country. Moreover, if the Clause were adopted, it is clear that we should have companies for the purposes of Income Tax substantially in the position of partnerships or in the position of a single individual. I hardly think that the companies themselves would be in favour of this if they had fully kept I hat possibility in view. I mention these difficulties to show that of themselves they would make it impossible for the Government to accept this Clause. During the War it is true that an arrangement of this kind was imported into the Excess Profits Duty, but that was a temporary duty for war purposes. These conditions do not obtain now. For those reasons my right hen. Friend is obliged to resist this Clause. But there is one comfort which it is as well to offer the House, and that is, I think that where a company holds, all the shares in other companies, there is the possibility of making an arrangement at the present time which would enable this result substantially to be achieved and it seems to be a matter for their ingenuity rather than for an alteration in company law.

Mr. HANNON: In view of what my hon. Friend has said, and in view of the eminently valuable hint contained in his speech, I ask permission to withdraw the Clause.

Motion and Clause by leave, with drawn.

CLAUSE 6.—(Rate of Entertainments Duty.)

Amendment made: In page 5, line 19, after the word "charged," insert the words on payments."—[Mr. Snowden.]

Mr. SNOWDEN: I beg to move, in page 5, line 21, to leave out from the first word "the" to the end of the Clause, and to insert instead thereof the words
entertainment has been promoted by a society or institution of a permanent character established or conducted solely or partly for philanthropic or charitable purposes, or by two or more such societies or institutions acting in combination, and that the whole of the net proceeds of the entertainment are devoted to philanthropic or charitable purposes, and the provisions in Sub-section (5) of Section one of the Finance (New Duties) Act, 1916, which, as amended by Sub-section (2) of Section thirteen of the Finance Act, 1922, require the repayment to the proprietor of an entertainment in certain cases of the amount of the Entertainments Duty paid in respect of the entertainment, shall have effect as if for the words and that the whole of the expenses of the entertainment do not exceed thirty per cent of the receipts' there wore substituted the words and that the whole of the expenses of the entertainment do not exceed fifty per cent of the receipts.'
This Amendment deals with a matter in which the House took considerable interest during the Committee stage of the Bill. The Amendment I now propose will achieve the following result. I think the House, at any rate, a large majority of the House when this matter was under discussion in Committee, thought it was undesirable 10 tax entertainments which were promoted by and for charitable considerations. But every Member who took part in the debate realised that something also must be done to protect the Revenue against exploitation by charities or private individuals. This Amendment, I submit, achieves both those purposes. A charitable association or a combination of charitable associations promoting an entertainment for the furtherance of charity will be entirely exempt from Entertainments Duty. The reason why the words
established or conducted solely or partly for philanthropic or charitable purposes
are inserted is in order that certain societies which exist for more than one purpose, one purpose being to confer benefit, shall not be excluded. For instance, the National Union of Railway-men maintain orphanages in parts of the country and do charitable work. That is
not a society primarily established for benevolent purposes, but unless we put in such words as "partly established for charitable purposes" the society would not benefit. It is a safeguard against exploitation. I think it is fur the benefit of every bona-fide effort thus to safeguard against exploitation. I have pleasure in moving this Amendment.

Mr. S. ROBERTS: The Chancellor of the Exchequer has, to a great extent, if not almost entirely, accepted the views put forward in Committee. I just want to put one question to him. It relates to the meeting of the three Choirs' Festival held at Hereford, Gloucester and Worcester in turn. The proceeds of that festival go to what are clearly charitable purposes. The promoters are the committee that has been formed for a considerable number of years for the particular purpose of that festival. After that festival is held each year the accounts are got out and the proceeds are handed over to the charity for which they are intended. The assurance I would like to have is for that purpose the committee will be, as it ought to be, considered a society of a permanent character. I am quite sure about it. If the Chancellor of the Exchequer thinks there is doubt about it, I wonder whether he could possibly add such words as "committee" after "society or institution." It is a case I know the Chancellor will sympathise with. There is nothing bogus about it. I should like to hear the Chancellor's opinion.

Lieut.-Colonel HOWARD-BURY: I should like to thank the Chancellor for the way in which he has met the views of the Committee. When this was discussed in Committee I think the whole House agreed that charitable entertainments should be exempt from the Entertainments Duty. All parties in the House desire to prevent the bogus charity exploiter, and I think by the words put in he has found a method of preventing bogus charity promoters and has allowed all charitable entertainments to be free. I think the concession we have obtained is not likely to cost the Treasury a great amount of money, but it is of great importance to the hospitals, and it is going to be a very great benefit to the whole country.
The Chancellor of the Exchequer was able to offer relief generally to entertain-
ments, but this very small matter must have escaped his attention at the time he gave the larger concession. I was very glad to have the opportunity of bringing it before the right hon. Gentleman, and I am equally glad he has been able to so reasonably accept our views. I fully realise the necessity of guarding against bogus charity promoters and the second part of the Amendment, which raises the expenses limit from £30 to £50 for charities outside the actual charity itself, is, I think, a sufficient safeguard. I believe the Amendment will include all reasonable charities.

Sir GODFREY COLLINS: Many of my hon. Friends associated with me are interested in this Clause and took part in the Debate on the Committee stage. Indeed it is the only point during the Committee stage on which we joined issue with the right hon. Gentleman. I only rise to thank him for having interpreted correctly not only our views but the general sense of the House by incorporating this new Clause in his Bill.

Mr. SNOWDEN: I am very grateful to hon. Members for the generous way in which they have accepted this proposal. In reply to the question put to me by the hon. Member for Hereford (Mr. Roberts), I can say that the case he quoted, if it does not come in for exemption under the first part of the Clause, certainly should under the second, provided the expenses of promotion are below 50 per cent.

Mr. N. CHAMBERLAIN: I am a little taken aback by the answer of the Chancellor of the Exchequer, because the example given by my hon. Friend behind me seems to be typical of a very large class of cases. I had certainly understood that, when a special committee was formed which had behind it an institution or society of a permanent character, the entertainment would be considered to be promoted by the society or institution, and not by a committee appointed ad hoc.

Mr. SNOWDEN: The right hon. Gentleman is quite right, but that is not the case cited by the hon. Member for Hereford (Mr. S. Roberts). The hospitals are not in any way associated with the promotion of the Three Choirs Festivals. If they were promoted by the hospital, although they called in a committee for
the purpose of working them, they would certainly come under the first part of the Clause.

Amendment agreed to.

CLAUSE 13.—(Amendment of Section 6 of Revenue Act, 1909, 9 Edward 7, C. 43.)

Mr. D. HERBERT: I beg to move, in page 9, line 22, to leave out the words "than in the United Kingdom," and to insert instead thereof the words "within the British Empire."
It is a pleasure to me to be able to propose this Amendment to Clause 13. The Clause was thought to be necessary in order that beer which is brewed in the Irish Free State should retain certain privileges which it enjoyed when the Irish Free State was part of the United Kingdom. It will be remembered that when this Clause was before the Committee the question arose, why, in order to deal with the Irish Free State, the Clause should be extended to beer brewed elsewhere than in the United Kingdom. It was feared it might favour German, Austrian and other foreign beers. The answer was that in practice there was no German or Austrian or foreign beer which would be in a position to reap the benefit of the Clause. I venture to suggest, however much that may he the case, it is not really an answer to what seems to be the more obvious course, and a safer one as well in ease there should be any question of foreign beer trying to get this advantage. I do not see, and I do not think the House will see, why, when we want to give particular favour only to home industries we should not include the term "within the British Empire." Therefore my Amendment is that this privilege instead of being made to apply to beer brewed elsewhere than in the United Kingdom shall apply to beer brewed in the United Kingdom or elsewhere in the British Empire. I venture to suggest there is no reason to say more about this. The Amendment practically explains itself, and I feel quite sure the Chancellor of the Exchequer will accept it.

Sir K. WOOD: I beg to second the Amendment.

Mr. GRAHAM: The object of this Clause is as described by the hon. and
learned Member. I explained during the Committee stage of the Bill that it was rendered necessary by the constitution of the Irish Free State and by our desire not to inflict a law on the trade in this commodity between Ireland and this country. I think it is undesirable to extend the Clause in the way the hon. Member suggests, because in practice, at the present time, no foreign beer does come into this country for re-export, and I am advised that the insertion of restrictive words would perhaps merely have the effect of depriving the country of certain raw material and also of preventing a certain amount of bonding for export which might be clone here. I do not see why we should lose that trade when it causes no damage whatever to our own industry. It is not a large question, however. I suggest to the hon. Member that we shall stand to lose by his proposal. I trust, therefore he will not press it.

Mr. HERBERT: My only regret is that we did not get this further objection when in the Committee. I quite accept it, and ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn

CLAUSE 19.—(Extension of Section 19 of Finance Act, 1920, 10 and 11 Geo. 5, c. 18.)

Mr. SNOWDEN: I beg to move, in page 13, line 8, to leave out the word "forty-five," and to insert instead thereof the word "sixty."
This is a consequential Amendment which follows upon the concession I announced earlier in the sitting with regard to allowances for housekeepers.

Amendment agreed to.

Bill to be read the Third time Tomorrow.

Orders of the Day — TELEGRAPH [MONEY] BILL.

Read the Third time, and passed.

Orders of the Day — ISLE OF MAN (CUSTOMS) BILL.

Read the Third time, and passed.

Orders of the Day — PUBLIC WORKS LOANS [REMISSION OF DEBTS].

Considered in Committee, under Standing Order No. 71A.

[Mr. ROBERT YOUNG in the Chair.]

Resolved,
That it is expedient to authorise the remission of arrears of principal and interest due to the Public Works Loan Commissioner, in respect of Eyemouth Harbour in pursuance of any Act of the present Session relating to Local Loans."—(King's Recommendation signified)—[Mr. Graham.]

Resolution to be reported To-morrow.

The remaining Orders were read, and postponed.

ADJOURTRNMENT.

Resolved, "That this House do now adjourn."—[Mr. Frederick Hall.]

Adjourned accordingly at Fifteen Minutes before Ten o'Clock.